PARIS-French REIT Foncière des Régions has added five Paris office assets worth €267 million to its portfolio in a stock and warrants-only deal with insurance groups Groupama and Predica, bringing the former for the first time into its senior shareholder base. The group will subsequently offer existing shareholders warrants for €200 million in equity at similar terms.

The deal, which will be submitted for approval by shareholders on 15 December, will be paid by the issue of 3.9 million new FdR shares, of which 1.9m will be issued at a price of €70 for Predica, and 2 million at €65 for Groupama. The deal will thus simultaneously boost FdR equity by €267 million. In addition, however, the group will offer bonus subscription rights to current shareholders to subscribe up to €200 million new shares at similar terms.

"This transaction will let Foncière des Régions grow the quality of its assets as well as boost shareholders' equity at an opportune time in the real estate cycle," commented FdR CEO Christophe Kullmann.

The assets comprise five high-quality office buildings in Paris totalling 41,600 square meters - with three representing 74% of portfolio value - plus one 11,290-square-meter asset at Issy-les-Moulineaux, and one smaller asset in Lyon. The overall portfolio yields an average 7%, with residual firm-lease duration of 3.2 years, vacancy rate of 3% and a €459 square meter per annum of rents, in line with market values. "This acquisition allows Foncière des Régions to strengthen its presence in key office markets in Ile-de-France, and to continue diversifying its rental base with large companies such as SNCF and Cisco," said FdR's Olivier Estève.

The bonus equity warrants for holders of Fonciere des Régions shares will be offered between 1 January 2010 and at least 31 December under terms similar to €65 per share in the acquisition. One equity warrant will be allocated for each Foncière des Régions share, and 15 will confer the right to buy one new Foncière des Régions share.