Listed French property company Altarea Cogedim has raised €600 million of equity for a Paris office fund, beating its original target, it has revealed.
In a statement, the company said the value-added AltaFund was oversubscribed and had attracted “top-tier” French and international institutional investors including pension funds and sovereign wealth funds. The company said it was one of the largest dedicated office property funds in the Paris region, and a first in terms of a fund of this size by an operating company.
Altarea, which is listed on the NYSE Euronext Paris stock exchange, held a first close in March of €350 million, but since added another €250 million of equity subscriptions. It was also disclosed that as the general partner, Altarea was committing €100 million – or 16 percent – of the total equity commitments to the vehicle.
Morgan Stanley acted as the placement agent for the fund.
The exact target return was not made public, but it is understood that investors can expect a blended mid-teen return from a portfolio of development projects and other investments. Sources said the fund was an eight-year vehicle subject to two, one-year extensions, and that debt would not exceed 55 percent loan to value.
“Having been raised in a climate of uncertainty, AltaFund is the first fund of such scale managed by a French real estate operating company,” said Stéphane Theuriau, chairman of the Altarea Cogedim Enterprise, a subsidiary of the main company.
Added Theuriau: “This €600 million fund provides AltaFund with a strategic tool in the current climate. When the time comes, we will be able to respond to the shortage in high quality new properties and growing demand for existing properties meeting new environmental requirements. Thanks to its commitment into AltaFund, the office property business should increase its contribution to the group's profits in the medium term.”
The strategy is to create a portfolio valued at €1.2 billion including leverage. It would acquire land or existing office assets to be repositioned into core assets with the aim of selling them in the medium term.
Altarea Cogedim has a portfolio of assets worth €2.7 billion at 30 June 2011.