(Feb 11): A series of office towers in Paris’s financial district are being taken over by lenders or are set for cut-price sales as the area grapples with a soaring vacancy rate and collapsing valuations.
Cale Street Partners, a lender backed by the Kuwait Investment Authority, has taken control of the Tour Hopen building in the La Defense district to the west of central Paris, people with knowledge of the process said, asking not to be identified as the details aren’t public. The building was owned by a group of investors led by Praemia REIM France.
Last month “shareholders of the fund that owned the Hopen Tower sold all of their shares to Cale Street Investments, which became the sole shareholder of the fund”, a representative for Praemia wrote in a statement in response to questions. Praemia remains the manager of the fund, while Generale Continentale Investissements has taken over as the building’s asset manager, it said.
The office towers of La Defense, about 5km west of central Paris, have been hit by the rise of home working, the end of the zero interest rate era and volatile French politics that have undermined business confidence. Demand for office space has focused on Paris’ central districts, causing vacancy rates in the area to soar.
“A high level of uncertainty, driven by both international factors and domestic political tensions, has significantly constrained occupier demand,” Knight Frank researchers wrote in a report due to be published this month. Vacancy rates across Paris vary significantly, from about 5.5% in the centre to 31.8% in the suburbs around La Defense, the report said.
There was about €455 million of debt, including unpaid interest, secured against the recently completed Tour Hopen as of December 2024, according to the latest available filings. Further loans were taken out post reporting period, the filings show.
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Accounts for the company that owns the building show that the terms of the loans had been breached as of June 30 last year, triggering a restructuring to avoid a default.
That included injecting further additional capital into the company and extending the maturity of the loan through March. The Praemia led consortium bought the building, which was occupied by oil-services company TechnipFMC, in 2013.
When the company vacated in 2021, the owners undertook a comprehensive overhaul financed by Cale Street but have so far yet to fill the building. A representative for Cale Street declined to comment.
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It comes as Tour Europe, another La Defense office tower, is being put up for sale, two other people with knowledge of the plan said. BNP Paribas SA’s real estate advisory unit and Cushman & Wakefield Plc have been appointed to market the property, the people said, asking not to be identified as the process is private.
The tower is expected to attract bids of less than €170 million, the value of the debt secured against it according to its last available accounts in 2020. That’s well below the €280 million for which it last changed hands in 2019, they added. It is currently rented to a unit of French national energy giant Electricite de France.
Inmark Asset Management Co Ltd, which led the consortium of Korean investors that bought the building in 2019, declined to comment.
Separately a pair of office towers owned by TotalEnergies SE are in the process of being offered for sale, two other people said. The energy giant is moving to new offices nearby.
A representative for TotalEnergies declined to comment.
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