French Arm of L.A. Firm Building 2 Paris Towers
With the sale of a commercial project in the Montparnasse district on Paris’ Left Bank, the Pacific Rim real estate market has been effectively extended to the banks of the Seine River.
The Los Angeles connection in this complicated equation involves the French unit of Los Angeles-based Kaufman and Broad Home Corp., which has sold the 15-acre Atlantique Montparnasse development for $372 million to a consortium of some of Japan’s largest industrial and financial firms.
Scheduled for completion late in 1991, the project will consist of 770,000 square feet of office and commercial space in two nine-story buildings on a platform over the train tracks at the historic Montparnasse station, according to Bruce Karatz, president and chief executive officer of Kaufman and Broad Home Corp.
The project, designed by architect Jean Willerval, is being built by Kaufman and Broad Development, a newly organized commercial real estate arm of Kaufman and Broad Home Corp., the third largest home builder in France and California’s largest single-family home builder. Kaufman and Broad’s financial partner in the project is Groupement Foncier Francais.
The Japanese investor, Kowa Real Estate Co. Ltd., has as its major shareholders the Industrial Bank of Japan, Toyo Soda Manufacturing Co., Nissan Motor Co., Nippon Life Insurance, Hitachi, Daido Kogyo Co., Daido Building K.K. and Kyoritsu Co.
Karatz added that, while Kowa Real Estate Co. has acquired the entire Atlantique Montparnasse development, the French group Cofimeg/Sefimeg has the option to acquire part of the north building for $68 million.
With total land area about the same as that of the landmark Place de la Concorde, Atlantique Montparnasse is believed by many to be the last development of its size in the center of Paris, Karatz said.
“In 1988, office development will account for 15% to 20% of Kaufman and Broad Home Corp.’s total revenues,” he said. “We view it (commercial development) as a very attractive complement to our existing institutional housing sales business.”
Until last year, Kaufman and Broad Home Corp. was known in California and France only for its single-family housing operations. The company delivered its first small office building in 1986 and now has 1.6 million square feet of office space under construction, including the Montparnasse project, Karatz said.
“We eliminate most of the risk in office development by selling our projects to institutional investors before purchasing land and commencing construction,” he said, adding that he has been “thinking of using the same approach in California. It’s an appropriate development technique for a public company like ours.”
The Kaufman and Broad development will complete a plan for the area around the Montparnasse station, which has been in progress since the 1960s, Karatz said. With the arrival of the high-speed train, known in France as the “TGV,” travel time will be cut to three hours between Paris and Bordeaux, a major port city about 350 miles to the southwest. By 1990, the station will be capable of serving 59 million passengers yearly.
The company’s selection by the city of Paris to build the Montparnasse project has been attributed to K&B;’s recruitment earlier this year of Henri Caro, formerly second in command at Bouygues, France’s largest civil engineering and construction firm.
