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Singapore's GIC buys 25% of CeGeREAL from Northwood

Thursday, April 7, 2016 - 09:10

SINGAPORE sovereign wealth fund GIC said on Thursday its affiliate has bought a 25 per cent stake in CeGeREAL at 35.65 euros per share from Northwood Investors, a privately held global real estate investment and management firm.

The transaction values the French property management firm at 476.73 million euros (S$732.7 million) based on the total number of shares at the end of 2015. After the sale, Northwood's entities will hold in concert 57.48 per cent of CeGeREAL.

Madeleine Cosgrave, deputy head of real estate, Europe at GIC, said GIC is keen to build scale in the French real estate market.

"We believe this transaction represents a good opportunity to gain exposure to a high-quality portfolio and to support management in its vision to grow CeGeREAL into a larger office platform," Ms Cosgrave said.

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According to Yahoo Finance, CeGeREAL's asset portfolio comprises three office properties in the inner suburbs of Paris. The company was formerly known as Sopreal SA and changed its name to CeGeREAL SA in February 2006.

To comply to its Reit-style tax structure (SIIC), Northwood has to cut its interest in CeGeREAL to less than 60 per cent imposed by the amended 2006 Finance Act before April 17, 2017.

With its Reit-style tax structure, CeGeREAL is exempt from corporate income tax on profits from its real estate activities. In exchange, the company is required to distribute 95 per cent of profits generated by its property rental activities and 60 per cent of the capital gains realised on its property sales.

The sale of the 25 per cent stake to GIC will be the final step to preserve the SIIC status of CeGeREAL. CeGeREAL closed at 33.21 euros in Paris on April 5.

J.P. Morgan and Brookfield Financial acted as financial advisors to Northwood on this transaction.

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