Fosun Property Holdings, the property investment and management arm of China’s Fosun Group, has inked an agreement to take over PAREF, a French property owner and manager, for around $48 million, according to an announcement from the Paris-based firm.
Following through on a binding offer announced at the start of the year, Fosun has signed an agreement with PAREF and four of its shareholders (APICIL, GESCO, MO1 and the Lévy-Lambert group) to buy 604,473 shares in the Euronext-listed company at the price of €75 ($79.5) per share.
The PAREF Group, also known as the Paris Realty Fund, owns various commercial buildings within and outside the Paris area. As of the end of 2016, the group owned €167 million ($177 million) in property assets and managed assets worth €1.3 billion ($1.37 billion) on behalf of third parties. The Paris Realty Fund generated revenue of €26.9 million ($28.5 million) in 2016, and its management arm is known as PAREF Gestion.
Following the acquisition of these shares, Fosun will file with the AMF (Autorité des marchés financiers) a simplified tender offer for the balance PAREF’s shares at the stated price of €75 ($79.5) per share.
Fosun Has a Hankering for Europe
Before this Parisian pact, Fosun acquired a 34,000-square-metre office complex in Frankfurt, Germany, for around €50 million ($53 million) in a joint venture with UK partner Resolution Property. The seven-storey property, found in Frankfurt’s Bockenheim district, was Fosun’s first in Germany.
Just before that purchase at the start of the year, Fosun crossed over into Russia to buy the nation’s historic Voentorg building just 500 metres from the Kremlin for $168 million, joined by local Russian real estate fund manager Avica. Back in 2015, Fosun bought the historic Palazzo Broggi, paying around €345 million ($381 million). And, for European football fans, Fosun, which has over $35 billion in real estate assets, picked up English football team Wolverhampton Wanderers Football Club last year.
Fosun’s PAREF properties can look forward to moderate growth in the coming year, according to data from JLL, which stated that office yields had remained stable at the end of the year in 2016, at 3 percent in the CBD and 4.25 to 4.75 percent in La Défense, a business district just west of Paris’s city limits.
Fosun Looks Rosy Despite Leadership Shuffle
A little over two weeks ago it was announced that Fosun’s CEO Liang Xinjun would be leaving the company he co-founded after more than 25 years; it was announced that vice president and former CFO Ding Guoqi would also be leaving.
The company stated that there would be short term effects from its decision to shake up the company’s leadership, but the numbers for 2016 looked positive. The Chinese conglomerate posted a record $1.5 billion in net profit last year, a jump of 27.7 percent from 2015. Fosun’s total asset value increased 19.5 percent and total debts grew 9.7 percent. The day after the announcement of Liang Xinjun’s departure, shares in Fosun closed 2.1 percent higher.
On the homefront, it was announced earlier this week that Fosun had paid $29 million for Fanhua, an independent online-to-offline financial services provider in China.