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The luxury brand group that owns the Gucci and Saint Laurent brands has signed a deal to sell majority stakes in three high-profile real estate properties in Paris to French private equity group Ardien.
Paris-listed Kering has announced that it will sell a 60% stake in real estate in Paris’ famous Place Vendôme and Avenue Montaigne shopping areas to Ardian for €837 million.
Kering will retain 40% ownership and will receive a guarantee that its brand will continue to occupy the building.
Top luxury groups, including Kering and larger rival LVMH, have spent billions of dollars on real estate in major cities in recent years in fierce competition to secure limited real estate in luxury shopping districts. The luxury group projects a carefully selected image of prestige and attracts wealthy people. shoppers.
But the tournament came at a difficult time for Kering. It is lagging behind rivals as it invests heavily in creating more upscale products to attract wealthy customers. It has also struggled to improve the performance of Gucci, its biggest brand, which accounts for half of the group’s sales and two-thirds of its profits. Kering last year issued an unusual profit warning for a major luxury goods group, and its shares have fallen more than 38% over the past year, giving it a market capitalization of 27 billion euros.
Competition for real estate requires tying up large amounts of capital, sometimes indefinitely. However, Wednesday’s deal is expected to close in the first quarter of this year, allowing the group to free up some of its investment while retaining control of the property.
“We are very pleased with this partnership, which allows us to secure a highly visible retail location in the long term while maintaining financial flexibility,” said Jean-Marc Dupré, Kering’s deputy chief executive officer. said. Ardian’s head of real estate, Stéphanie Bensimon, said it was an “innovative approach to the luxury group’s real estate strategy”.
Last spring, Kering spent 1.3 billion euros to acquire a large parcel in Milan’s Via Monte Napoleone from US private equity group Blackstone, in what was then the biggest European real estate deal in two years. . The luxury brand group also bought a building on the corner of Fifth Avenue and 56th Street in New York last January for $963 million, adding to its portfolio of flagship assets in other cities including Paris and Tokyo. Then he announced.
However, Kering insists it does not intend to manage its real estate portfolio as a business strategy, but rather makes investments to support its brands.
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Kering CEO François-Henri Pinault told reporters in February that “when a brand’s sales exceed 3 billion euros, these[types of locations]become essential.” Ta. But “just because a building in a prime location is available doesn’t mean we’ll buy it. We’ll only go for it if it makes sense.”
Properties in Wednesday’s deal include the Boucheron jewelry brand’s historic home on Place Vendôme, which underwent extensive renovation in 2018, and Valentino and Balenciaga stores on Avenue Montaigne, just off the Champs-Elysées. Included. Both Boucheron and Balenciaga are owned by Kering. In 2023, it acquired a 30% stake in Valentino.
