The past year saw French investors come back into the U.S. commercial real estate market in a big way. French investment companies spent nearly $1.8 billion on income-producing properties in the states during the 12-month period that ended in second-quarter 2022.
This capital-infusion level marked a 131% increase from the prior 12-month period. And it moved France up from 11th place to ninth place on the list of the top foreign countries for commercial real estate investments into the U.S., according to data from MSCI Real Assets. France was fourth among European nations on the list, trailing only Germany at No. 4 overall, Switzerland at No. 6 and the United Kingdom at No. 8. In general, European nations showed much greater interest in the recovering U.S. property market during this four-quarter period, with only the U.K. reducing its year-over-year investment level.
French cross-border investments into the U.S. accounted for 2.3% of the overall volume by foreign companies during the 12-month period, MSCI reported, with the $1.8 billion spread across 36 properties. Leading the way, unsurprisingly, was the diversified insurance and investment company AXA Group. With branches around the globe, including in the U.S., AXA has long been a major player in real estate acquisitions.
AXA Group had the most activity among French companies in the U.S. with eight property deals from Q3 2021 through Q2 2022. In fact, AXA was the only French company among the top 20 cross-border buyers during this time, according to MSCI. The company’s largest deal involved the continuation of a two-year-plus, $2.05 billion project that will eventually result in the acquisition of 32 industrial properties across the country. The deal isn’t expected to be completed until later this year.
AXA Millésimes, one of the firm’s subsidiaries, also was active in recent months. This past July, it bought the 275-acre Platt Vineyard in Sonoma County, California, from vineyard investment fund Russian River Partners for an undisclosed amount. The Platt Vineyard added to AXA’s extensive collection of wineries and vineyards.
LVMH, a conglomerate that specializes in luxury goods, bought Tiffany & Co. in 2021 for $15.8 billion and made news at the start of last year as it mulled whether to buy the iconic American fashion company Ralph Lauren. The deal appeared to fall through shortly thereafter. Still, the massive company was making other deals. The Moet Hennessy division of LVMH acquired high-end California winemaker Joseph Phelps Vineyards for an undisclosed amount. The vineyard’s Insignia wine, a Bordeaux-style blend, can often cost upwards of $250 per bottle.
French companies also bought a smattering of smaller businesses and properties in 2022. This included the acquisition of Illinois-based GatesAir by Paris-based Thomson Broadcast. GatesAir manufactures over-the-air broadcasting and public safety equipment, and it is a pioneer in many aspects of analog and digital broadcasting for radio, TV stations and media networks worldwide.
On an interesting note of French firms working together, the Paris-based banking conglomerate BNP Paribas last year upgraded the 323,000-square-foot space that it leases in the AXA Equitable Center in Manhattan. The 54-story tower has been owned by the AXA Group since 1991. BNP Paribas revitalized the space to entice its 2,300 workers in New York City to return to the office. Employees were required to spend at least two days a week in the Manhattan high rise beginning in mid-2022. The changes include employee access to baristas, a bike room and flexible working spaces. ●