La Francaise (Real Estate)

La Française has a multi-expertise business model organised around four core activities: real estate, securities, investment solutions and direct financing. La Française’s real estate offer targets institutional and private investors worldwide and is all-encompassing: direct and indirect real estate investments, discretionary and non-discretionary asset management, real estate securities, real estate debt, etc. Assets are sourced at a pan-European level.

With 596 professionals and offices in Paris, Frankfurt, Geneva, Stamford (CT, US), Hong Kong, London, Luxembourg, Madrid, Milan, Seoul and Singapore, La Française manages over €70bn (30 June 2018) in total assets, of which over €17bn are real estate assets.

La Française is owned by Credit Mutuel Nord Europe, a banking and insurance group present in Northern France and Belgium.

Sector forecasts

INDUSTRIAL: Improvements in manufacturing output, combined with structural trends such as the growth of e-commerce, should continue to result in solid occupier demand for good-quality logistics space in Europe. Low availability of prime logistics space is expected to move demand beyond core locations, and build-to-suit activity is expected to remain high. Increasing demand combined with a lack of availability, should exert upward pressure on rents. Investor appetite is expected to remain high as the prime yields of logistics remain attractive compared to other assets. A further compression of yields is anticipated in some cities reflecting the lack of investable products.

OFFICE: Total returns are expected to be driven by income return on the back of anticipated improvement in occupational markets. Supply has remained modest across most European real estate markets. The pipeline of development projects has picked up in some cities, but is largely pre-let. Consequently, vacancy rates are expected to remain low in most markets, supporting robust levels of rental growth, particularly in those markets where vacancy rates are expected to decrease the most. Secondary markets offer potential for growth, due to the spill-over from tightening prime markets and a more favourable cost base for tenants.

After four years of yield compression throughout Europe, prime yields are expected to remain stable for the most liquid of assets. Yields for other segments, notably the large-transaction segment, may experience upward pressure as competition eases.

RESIDENTIAL: The French housing market should see a consolidation of transaction volumes at a high level, due to a very gradual increase in mortgage rates. Prices are expected to continue to increase in “tense” areas, although the new ELAN housing plan is likely to prove ultimately beneficial thanks to an increased supply. Although courts have annulled rent controls, rent caps are likely to be reinstated, notably in Paris and Lille.

RETAIL: The European retail market has shifted in favour of tenants, with the more widespread use of tenant incentives, shorter lease terms, tenantonly break options and acceptance of solely turnover-based rents. The polarisation of the market is expected to accelerate. These forms of concession should be far more prevalent in non-prime retail pitches. Rental growth should remain strong for high street retail on prime pitches, on the back of strong demand notably from international retailers. Shopping centres should experience subdued rental growth for dominant assets and witness a decrease in rents in secondary assets where vacancy is rising. Investor demand should continue to focus on high street retail as opposed to shopping centres.

OTHER: Dynamic travel and tourism markets should support positive hotel operating performance. Increasing investor interest in the hotel sector, due to higher yields and diversification benefits, should result in increased European hotel investment volumes, although a possible shortage of investable supply may keep a lid on the growth of transaction volumes. 

Investment principles & strategy

As an expert in the French, German and UK real estate markets, La Française’s investment philosophy is based on a rigorous combined top-down and bottom-up approach, including extensive research. Even as investors adopt a more and more global approach to real estate, La Française believes that each market behaves differently. The group has therefore adapted its structure, for example with a direct real estate platform located in Frankfurt, in order to acquire the necessary market expertise.

Geographic and sectoral diversification is an important component for La Française as well as all matters related to risk management.

La Française benefits from its long-standing market presence and is able to source the best opportunities.

Strategic corporate development

La Française Global REIM, via its subsidiaries La Française Real Estate Partners and La Française Real Estate Partners International and thanks to its array of diversified investment solutions (geographic area, strategy: Core/ Core , value added, opportunistic and theme: offices, retail and managed property), has continued to attract Asian capital to the European real estate market. La Française Global REIM currently manages €1.5bn in European property assets (United Kingdom, Germany, France and Belgium) on behalf of Asian investors.

La Française has enhanced its core business as a specialist in real estate investment and third-party management. La Française, through the acquisition of greenfield and brownfield development sites, now applies an investment approach aimed at creating value around infrastructure projects associated with the Grand Paris project.

La Française Global REIM’s inaugural sustainable collective real estate fund was awarded for four consecutive years (2015/2016/2017/2018) the GRESB Green Star designation. (Source: GRESB)

COMPLIANCE STATEMENT

^{The information and material provided herein does not in any case represent advice, an offer, a solicitation or a recommendation to invest in specific investments. Rankings and awards are not indicative of future performance and may evolve over time without prior notification. La Française disclaims all liability relating to any investment decided on the basis of this document. Where La Française has expressed opinions, they are based on current market conditions and are subject to change without notice. These opinions may differ from those of other investment professionals. Issued by La Française AM Finance Services, home office 128 Boulevard Raspail, 75006 Paris, France, regulated by the “Autorité de Contrôle Prudentiel” as investment services provider under the number 18673 X, affiliate of La Française. La Française Real Estate Managers was approved by the “Autorité des Marchés Financiers” under N GP-07000038 on June 6, 2007. La Française Real Estate Partners International and La Française Real Estate Partners are members of group La Française.}