Funds pour €1bn into booming Paris market

News

01 April 2003

The newly completed 60,000m2 Adria tower is in the ZAC Danton area at the western edge of La Défense, near the Grande Arche. It is let to engineering company Technip at a stepped rent and the deal reflects an average net yield of around 6.5%. DB Real Estate is buying the property for its grundbesitz-global fund.

CGI has prepared a bid of around €600m for a three-building office portfolio, with a total area of around 100,000m2, which is being sold by Philip Morris and Vivendi, and includes the sister tower to Adria, called Egée. The properties are fully let to tenants including Ernst & Young, AIG and Cégétel. CGI’s offer for the portfolio is understood to be higher than bids by US investor Blackstone and rival German open-ended fund manager Deka.

CGI is also forward funding Capital & Continental’s 23,000m2 Le Palatin office development close to Adria, for around €120m. One of the project’s buildings will be constructed over a railway line and the scheme will be completed in mid 2005. It has not yet been let.

Also is Paris, GIC Real Estate, the property investment arm of the Government of Singapore Investment Corporation, has bought a 50% stake in 6-8 Boulevard Haussmann from AXA for a reported €200m. The 25,000m2 city-centre office building was refurbished last year and is fully let on long-term leases.

Demand for Paris property shows no sign of abating. Robert Waterland, chairman of Soros-backed Awon Group, said: “The capital markets are as strong as ever. It’s surprising, as the leasing market is lacklustre, although not as bad as London or Frankfurt. There is huge competition for investments among German, US, Dutch and Middle Eastern investors.”

Last month, DB Real Estate forward funded 50,000m2 of office and retail development in three separate deals totalling €292m across Paris, on behalf of its open-ended property funds. DB is buying the 24,00m2, mixed-use Insight scheme, which is being developed by Bouygues Immobilier at ZAC, Paris Rive Gauche, for €160m; the 18,500m2 Le Monde newspaper office at 74-84 rue Auguste-Blanqui for €90m; and is forward purchasing the 4,900m2 Euro Athénes on rue d’Athénes for €42m.

International investors spent over €1bn on Paris property this month, stoking an already booming office investment market. Germany’s DB Real Estate is to acquire the Adria tower in La Défense for €380m from US fund Colony Capital and Caisse des Dépôt de Québec and, in a deal involving three properties close by, German open-ended fund manager CGI is tipped to be making a €600m acquisition. The newly completed 60,000m2 Adria tower is in the ZAC Danton area at the western edge of La Défense, near the Grande Arche. It is let to engineering company Technip at a stepped rent and the deal reflects an average net yield of around 6.5%. DB Real Estate is buying the property for its grundbesitz-global fund. CGI has prepared a bid of around €600m for a three-building office portfolio, with a total area of around 100,000m2, which is being sold by Philip Morris and Vivendi, and includes the sister tower to Adria, called Egée. The properties are fully let to tenants including Ernst & Young, AIG and Cégétel. CGI’s offer for the portfolio is understood to be higher than bids by US investor Blackstone and rival German open-ended fund manager Deka. CGI is also forward funding Capital & Continental’s 23,000m2 Le Palatin office development close to Adria, for around €120m. One of the project’s buildings will be constructed over a railway line and the scheme will be completed in mid 2005. It has not yet been let. Also is Paris, GIC Real Estate, the property investment arm of the Government of Singapore Investment Corporation, has bought a 50% stake in 6-8 Boulevard Haussmann from AXA for a reported €200m. The 25,000m2 city-centre office building was refurbished last year and is fully let on long-term leases. Demand for Paris property shows no sign of abating. Robert Waterland, chairman of Soros-backed Awon Group, said: “The capital markets are as strong as ever. It’s surprising, as the leasing market is lacklustre, although not as bad as London or Frankfurt. There is huge competition for investments among German, US, Dutch and Middle Eastern investors.” Last month, DB Real Estate forward funded 50,000m2 of office and retail development in three separate deals totalling €292m across Paris, on behalf of its open-ended property funds. DB is buying the 24,00m2, mixed-use Insight scheme, which is being developed by Bouygues Immobilier at ZAC, Paris Rive Gauche, for €160m; the 18,500m2 Le Monde newspaper office at 74-84 rue Auguste-Blanqui for €90m; and is forward purchasing the 4,900m2 Euro Athénes on rue d’Athénes for €42m.