Inovalis REIT finalises sale of major Paris asset

Canada’s Inovalis REIT said this week that it has completed the sale of the Rueil office scheme located in the Rueil Malmaison business district in Paris, to a joint venture between Saudi Arabia’s Sedco and fund manager Inovalis.

The deal – which was first agreed on a forward purchase basis in 2016 - allows the repayment of mezzanine financing provided by the REIT for the acquisition and redevelopment of the property. The mezzanine loan carried an 8.5% interest rate and represented 40% of the equity required for the acquisition and redevelopment of Rueil. Additionally, the REIT will also receive 20% of the profit from the transaction.

The transaction was also financed by a €144.6 mln senior loan and a €48.2 mln VAT facility granted earlier this year by German lenders BayernLB and pbb Deutsche Pfandbriefbank.

Dubbed the Convergence building, the complex provides around 25,000 m2 of space and 334 parking spaces. It is set for delivery later this month to Danone, a French multi-national food products firm, under a 12-year lease for 100% of GLA.

Khalil Hankach, CFO and CIO of Inovalis REIT, commented: ‘This further evidences Inovalis REIT's ability to execute on unique value-add opportunities that provide both attractive cash flow profiles and upside profit participation. This transaction continues to illustrate management's commitment to simplifying the balance sheet and ownership structure of the REIT's assets.’

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