A syndicate of more than 100 wealthy clients of Bank of Ireland Private Banking will realise a profit of some €61 million after 19 months on the sale of a Paris office complex leased to Cartier, the jeweller and watchmaker.
Members of the syndicate invested a total of €63 million when the bank bought the Cité du Retiro complex in central Paris for €285 million in December 2005.
They are now poised to receive €124 million for their equity interest following the sale of the 21,000 sq metre complex for €370 million to KanAm Grund, a German fund manager.
The deal is expected to close in early August, yielding a 96 per cent return for investors who put an average of €400,000-€500,000 into the original transaction. The off-market sale of the property follows an approach to the bank from KanAm, it is understood.
"In 2005 our strategic analysis identified Paris as being poised for significant rental growth in the office market, particularly in the central business district where new supply pipeline was very limited," said Peter Collins, director of property in the private bank.
"With this in mind we decided to expand our investment presence within this market. Since 2005 this rental growth has materialised and there has been a huge increase in international investor interest in Paris which has driven yields down. Given its location, its quality and the calibre of its long-term prime tenant Cartier, the property always represented a blue-chip investment for our clients."
Mr Collins said the bank expected an investment term of 10 years and anticipated an annualised return of 12 per cent when it bought the property, which is in the eighth arrondissement area near the Champs Élysées.
"The performance of the asset has been significantly ahead of our expectations. Despite the relatively short period for which we held the asset our investors have seen a return on their invested capital of just under 100 per cent. We were delighted to recommend to our private clients that we now sell the building given the substantial gain made at this juncture."
Mr Collins said the private bank still had a very positive outlook on the office market in Paris, as well as a number of European markets.
The private bank has some €9 billion in assets under management, €2.5 billion of which is in property. Its other asset classes include equities and bonds.
