EXCLUSIVE: Northwood recapitalizes French fund

The New York-based private equity real estate firm has acquired the bulk of the assets in a 2007-vintage vehicle.

Northwood Investors has recapitalized STAM Europe’s 2007-vintage fund, STAM REI III, with the acquisition of 15-property portfolio for €164 million. The New York-based private equity real estate firm is understood to have purchased the assets at a premium to their net asset value.

Known collectively as the Printemps Portfolio, the 15 assets encompassed more than 87,000 square meters (936,460 square feet) of office and industrial space in the Paris region and a number of regional markets in France. The properties included Clichy Urbia, a 16,500 square meter Class A office building in the Paris region; the Toscane Portfolio, a 25,000 square meter portfolio of nine office properties also located in the Paris region; and the Prosdim portfolio, which comprised five industrial properties totaling 46,000 square meters in regional French markets. STAM Europe will continue to manage the assets in the Printemps Portfolio.

STAM REI III, which raised a total of €365 million, was said to be nearing the end of its life and had been extended. According to two people familiar with the matter, an auction process was held to bring in a new investor to recapitalize the fund. Northwood is said to have bought out all of the limited partners’ interests in the Printemps Portfolio, providing liquidity to the investors in the process. However, all of the LPs remain in STAM REI III, and Northwood has not acquired an ownership stake in the fund. Following the Northwood acquisition, PERE understands that only a few investments remain in the fund, which is expected to be fully liquidated in the coming months.

“The Printemps Portfolio represented an attractive opportunity to increase the scale and scope of our existing holdings in France at a cyclical low point in the French property market,” said John Kukral, Northwood’s president and chief executive officer. “We believe France is at an interesting inflection point with potential for further upside as reforms continue to be implemented alongside accommodative monetary policy.”

Antoine de Broglie, STAM’s chairman, added: “We are pleased to have completed this highly complex transaction with Northwood in a relatively rapid timeframe. With the successful conclusion of this sale, STAM was able to provide a holistic liquidity solution for the bulk of STAM REI III’s assets to its investors at an attractive valuation.”

Northwood’s recapitalization of STAM REI III, which closed this week, follows last week’s announcement of its anticipated takeover of Cegereal, a Parisian office REIT, through the acquisition of a nearly 60 percent stake from Commerz Real’s HausInvest fund. That transaction is slated to close in November.

Accord Europe, a San Francisco-based advisory and capital raising firm, represented STAM Europe on the deal, while Northwood was self-advised. Accord also acted as the seller’s advisor on another Northwood transaction last December, the acquisition of UK fund manager Highcross Strategic Advisers and its 7.1 million square foot office and industrial portfolio.

Northwood, which manages approximately $5.6 billion of assets, has offices in New York, Denver, Los Angeles, London, Luxembourg and four regional UK cities. The firm’s other property holdings in France currently include Defense Plaza, a 14-story Class A office building in Paris; Pointe Metro, a 253,148 square foot Class A office campus in the Paris suburb of Gennevilliers; and a 2.8 million square foot industrial portfolio across multiple markets in France, according to its website.

STAM Europe, which was founded in 1997, has closed on €3.3 billion of investments and currently has approximately €500 million of assets under management through value-added funds and separate accounts.

Source : PERE