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 610 professionals and offices in Paris, Frankfurt, Geneva, Hamburg, Stamford (CT, USA), Hong Kong, London, Luxembourg, Madrid, Milan, Seoul and Singapore, La Française manages €68bn (30 June 2019) in total assets, of which €21bn 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: Logistics benefit from strong market fundamentals: robust demand, disciplined supply, land scarcity and historic low vacancy. Rents are still at a discount compared to their prior peaks and replacement-cost rents in most markets, creating the potential for improving rental values. Although investment demand for logistics is steady and strong, investment volumes are likely to decrease due to the inadequacy of supply. Logistics prime yields are still set to decline in numerous European markets.

OFFICE: Positive but slower growth in office-based employment is likely to impact letting demand. Supply-side constraints are expected to support positive rental growth in most markets, although new development starts are picking up in some markets. Investment volumes are expected to shrink marginally, due notably to the lack of core properties for sale. Competition for prime assets is expected to intensify further with still some room for new compressions.

To earn more attractive returns, investors are likely to expand their geographical universe or take some letting risk in central locations which could result in heavy pressures on yields for assets located on the fringe of CBD locations and on speculative buildings in central locations. Investment opportunities are expected to arise along the route of new public transport lines.

RESIDENTIAL: Investors’ interest for multifamily housing is expected to continue to rise, underpinned by the growing demand for rentals across Europe. This is partly driven by the phenomenon of urbanisation and the high cost of acquisition for private owners, coupled with a structural lack of supply in many markets.

In an environment of slowing economic growth, multifamily assets are expected to provide investors’ portfolios with favourable risk-adjusted returns and a reduced vacancy risk. Residential alternatives (student housing, senior housing) offer good opportunities considering their solid fundamentals, diversification benefits and attractive risk-adjusted returns.

RETAIL: As retailers’ margins are expected to continue to be under pressure, squeezed between weakening demand and rising costs, the outlook for rental growth is mixed. Investor demand could remain highly selective due to polarisation of the market. Prime locations and local convenience retailing are expected to outperform and should see their yields remaining at record lows with some pockets of rental growth. Other assets are expected to experience further increases in net yields and rents mostly flat or declining. Pricing corrections may result in investment opportunities for investors with active asset management strategies.

OTHER: Growing global demand and the growth of the middle class in emerging countries support the positive outlook of the tourism sector. Occupancy and underlying property performances are likely to remain strong as tourism and business fundamentals remain solid thanks to strong infrastructure developments in the region. Yield-driven investors, and notably generalist investors (as opposed to specialist hotel investors) are likely to push investment volumes to record highs.

Investment principles & strategy

As an expert in the French, Benelux, 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 with offices in London and 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-plus, 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 has completed over €2bn in European real estate transactions (Belgium, France, Germany, Luxembourg and the United Kingdom) 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.

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.}