Laurian Douin, Altarea Cogedim Enterprise

Altarea Cogedim is a merger between two real estate players: Altarea and Cogedim. Altarea is a 19-year old company created as a retail development and investment trust and initially focused only on France. In 2007, it took over a major French player named Cogedim, who is an historical developer in the residential and office sectors in France. Altarea Cogedim is now number three in retail, number five in France in terms of residential development, and one of the biggest developers in the office sector in France. Laurian Douin, Deputy General Manager of Altarea Cogedim Enterprise, spoke to Ilona Taillade about the company's focus and the latest developments in the French market.

What is your role at Altarea Cogedim?

I joined Altarea before it took over Cogedim in 2006 to work as the Corporate Finance Director of the Group at the time when Altarea was looking for new opportunities to expand as a retail expert Europe-wide. After taking over Cogedim in 2007, we changed our strategy: from a European leader in retail we aimed to become a French leader in all asset classes.

In this strategy, the office business of Cogedim was only working as a project manager for third parties managing some big restructuring or development of new office assets. One of the ideas to enhance the value of Cogedim was to create an investment arm within Cogedim, which we launched in late 2009 and closed in 2011. The purpose of this investment arm was to invest in some projects we believe in and not to have to find some third-party capital we don’t have control over for all the projects we are setting up.

In 2011 we raised a €600 million equity investment fund which is targeting office investments in the Paris region with a value-add profile from light asset management to green field development. I am in charge of this office investment platform within Altarea Cogedim. AltaFund is really a development arm which is working for third parties and for the fund as an internal expert and project management service provider.

So your focus is more Paris rather than other areas within France?

As an investor yes, we are only focused on the Paris region because it is the place with the largest market in terms of liquidity and size of investment. We may look at some alternative markets such as Lyon, which is the second largest market in France, but the other office markets in France are too small to play as a major investor specifically, with this value-add and short- to medium-term investment profile.

We remain an office developer in the regions. We have recently delivered two hotels, one in Marseille one in Nantes and we are also involved in what we call ‘turnkey projects’ on behalf of tenants in other regional cities of France. However, we don’t invest our capital in speculative projects, we just play the role of a project manager to develop an asset on a given plot of land.

Do you see a big change in the French market compared to the rest of Europe?

We have several investors within AltaFund; approximately half of our investors come from outside Europe, from the Asia & Pacific area. It’s an interesting view we are getting from them on France: they are worried about the changes in the government but what remains unchanged is that Paris is a gateway city to continental Europe. It is difficult to say that you want to invest in real estate worldwide if Paris is out of your map. Paris remains a core market that many international players have invested in and this is the reason why we see a lot of liquidity on the market.

The liquidity is coming from different players depending on the market cycle. It was very strong with German players before the crisis as well as with French managers investing retail money such as OPCI and SCPI managers. Now we see some liquidity coming back from American investors who are finding opportunities in France and believe that there is a point of entry in the French market today. That is good in terms of capital opportunities. From my perspective, there is still a lot of appetite in France not necessarily because the market trends are promising, but because the market is so deep that you cannot simply replace it with the German market or the London one.

You mentioned that there is an Asian interest, but what about European players looking to invest in France?

I would say that some European investors are changing their locations Europe-wide; for example, if France used to represent around 25% of their locations in Europe, it may come down to 20% and if Germany used to be at 10%, it might rise to 15%. Nevertheless, they certainly do not wish to exit France.

Is your company looking at any other opportunities other than France, not necessarily in Europe but globally? What differentiates your company from other companies?

No, the aim of our company is to be a French champion/player specialized in France, and to be able to say to any investor in residential, retail or office "should you want to have the right operating partner to invest in France, you should come to us".

We are a very large team, we play in all the fields of real estate from legal, finance, property management, asset management, development, architecture, leasing, design and we have all this in house. We feel that it would be very difficult for us to follow this kind of business model in an efficient manner as we do in France should we go outside France because we are basing our strategy on the fact that we have been playing in France for 20 years in retail and 50 years in residential and offices.

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