CBRE Global Investment Partners (CBRE GIP), a division of real estate investment management firm CBRE Global Investors responsible for bespoke investment strategies, has completed a rare secondaries investment into a club transaction.
The firm revealed today it had acquired a 20 percent position in Tour Adria, a 580,000 square foot office building in the La Defense business district of Paris, from investors in a club that bought the property last year. The asset is managed by Paris-based fund manager Primonial REIM.
CBRE GI declined to divulge how much it paid for the stake in the 40-story building, nor whether the transaction was struck at a discount or premium to net asset value.
However, the asset was acquired by the investors, comprising French and Asian insurance companies, last year for approximately €450 million, implying that CBRE GIP picked up €90 million of the original equity.
The transaction is a rare example of an investor buying into an existing investment vehicle that has been structured as a real estate club deal. Traditionally, most real estate secondaries deals happen between investors with passive positions in traditional investment funds.
Club investments – essentially direct deals typically concerning one or few transactions and involving a small handful of similar type investors – became popular after certain investors became dissatisfied with traditional funds and sought greater controls over their investments in the aftermath of the global financial crisis.
While funds have since regained much of the popularity they lost, club investments continue to occur in the primary real estate sector, particularly among larger institutional investors.
However, given their relative infancy compared to primary fund commitments, there have been few seconadaries deals of note between investors in real estate club deals, making the acquisition by CBRE GIP all the more notable.
Jeremy Plummer, chief executive officer at CBRE GIP, said: “This investment demonstrates CBRE GIP’s ability to take over investors’ positions in existing clubs.”
“Whilst the macro-economic environment in France remains challenging, we believe this acquisition offers a unique opportunity to access a landmark building in one of the largest European business hubs at an attractive entry point in the cycle“.
In support, Mark Evans, head of equity placement at CBRE, added: ““Despite the current letting challenges, and the macroeconomic environment in France, La Defense still appeals to international investors. Buying into offices in La Defense, at this point in the cycle, could prove opportune provided investors can acquire assets with long term income secured for several years.”
Tour Adria is fully let to Technip Group on a 12-year lease until 2021 with annual indexation.