Investing in Paris 2017

BNP PARIBAS REAL ESTATE GUIDE TO INVESTING IN PARIS 2017

INTERNATIONAL INVESTMENT

Real Estate for a changing world ABOUT BNP PARIBAS REAL ESTATE... BNP Paribas Real Estate is the market leader in commercial real estate services across Europe with €704 million of revenue, €155 million of net profit before tax and 3,900 employees.

2016 KEY FIGURES Developing Valuing 154,000 m² of office space delivered in Europe €289 billion worth of assets valued 178,500 m² under construction in Europe (as of January 1st 2017) 130 million m² valued Buying, Selling, Renting Managing, Optimising Close to 3,850 transactions in commercial real estate 38 million m² managed in commercial real estate One transaction every 18 minutes across Europe €19 billion investment volume transacted in commercial real estate Investing, Valuing €24.1 billion of assets under management across Europe 6.2 million m² of commercial real estate leasing + €2.1 billion in one year transactions in 2016 Simplifed joint stock company with capital of € 383,071,696 - 692 012 180 RCS Nanterre RCS 180 012 -692 €383,071,696 of capital with company stock joint Simplifed 167, Quai de la Bataille de Stalingrad - 92867 Issy-les-Moulineaux Cedex Issy-les-Moulineaux - 92867 Stalingrad de Bataille la de 167, Quai Investing in Paris was edited by BNP Paribas Real Estate Real Paribas BNP by edited was Paris in Investing BNP Paribas Real Estate is part of the BNP Paribas Banking Group Banking Paribas BNP the of part is Estate Real Paribas BNP Tax clinic Need toknow:Letting Need toknow:Acquisition Hotel markets Logistics markets Retail markets Main officemarkets Foreword by Larry Young OUR INVESTMENT TEAMS METROPOLIS" "INVENTING THEGREATER PARIS THE GREATER PARIS PROJECTAND INVESTOR TOOLKIT Top 10reasonstoinvestinParis PARIS OVERVIEW Main Paris businessdistricts INTRODUCTION Need toknow:Key legalandtechnical terms Code NAF 4110B - CE identification number FR 666 920 121 80 121 920 666 FR number identification -CE 4110B NAF Code www.realestate.bnpparibas.com - Tel.: +33 1 55 65 20 04 20 65 155 +33 -Tel.: www.realestate.bnpparibas.com CONTENTS with the contribution of Baker McKenzie Baker of contribution the with March 2017 - 500 copies -BNPPREI03 copies -500 2017 March Front cover picture: www.agencebisart.com Non contractual document Non contractual BNP Paribas Real Estate Real Paribas BNP Headquarters

3 p.42 p.38 p.34 p.32 p.30 p.26 p.24 p.22 p.18 p.08 p.06 p.05 p.04

PEFC_ON_AVEC_CERTIF_1L_Q.pdf 1 20/06/13 10:16

10-31-2629 / Certifié PEFC / pefc-france.org MAIN PARIS

INTRODUCTION BUSINESS DISTRICTS

CLICHY PARIS CBD ST. OUEN Office letting transactions ÉTOILE PARIS CBD OPÉRA over 1,000 m² in 2016 ST.DENIS LA DÉFENSE PLEYEL NEUILLY/LEVALLOIS

NORTHPARIS EAST NANTERRE PRÉFECTURE

RUEIL- MALMAISON

BOIS DE BOULOGNE

BOIS DE VINCENNES

BOULOGNE / ISSY-LES-MOULINEAUX RIVESBALARD DE SEINE TH

MONTROUGE PARIS 12-13 ARCUEIL DISTRICTS

4 FOREWORD BY LARRY YOUNG

The city of lights

Paris is a global city at the crossroads of From the 1980’s with the first major Europe. It is an economic powerhouse, with investments by the North American institutions the world’s highest proportion of fortune 500 and German funds, international investment companies, but still retains its historic, has increased constantly in France. Middle- beautiful routes being the world capital for Eastern and Asian investors compete with us, fashion, culture and a tourist hotspot. the European and French investors who have always been strong in their home market. The real estate market is one of BNP Paribas Real Estate has an the largest and most liquid in the unrivaled track record in France world with an office market of with new comers and experienced over 55 million square meters. investors. Paris is the worlds 5th largest investment market and the This guide outlines the top ten largest in continental Europe. reasons to invest in Paris as well The office market is showing as statistics on the market. strong signs of recovery, and potential rental growth. The With the legal and tax experts high end retail market is world Baker McKenzie firm, we have famous with fierce competition collated practical information on from global brands for the best locations, navigating the fiscal and legal aspects of and the city benefits from impressive investing in Paris. shopping centres and department stores. The logistics market in the Paris suburbs We hope you find this a useful insight into forms part of the prime European hub, and investing in the Paris real estate market. has been transformed over the past years.

Larry Young Director Capital Markets International Investors BNP Paribas Real Estate

5 PARIS OVERVIEW PARIS Top Reasons to invest in Paris

1 THE LEADING OFFICE LETTING MARKET IN WESTERN EUROPE With a total take-up of over 2.4m m² in 2016, the office market in the Paris Region is one of the most dynamic in Europe. Paris has one of the world's largest office stock totalling 55m m².

2 A DIVERSE OFFICE OCCUPIER BASE The Paris office market has a highly diverse occupier base, as shown in 2016.

10% 9% 7% 11% Bank - Finance - Insurance Industrial groups Public sector 20% IT, telecom and start ups 11% Communication - Creation Legal Retail - Logistics 11% Other services 20%

6 PARIS IS THE LARGEST INVESTMENT 3 MARKET IN CONTINENTAL EUROPE 7 WORLD LEADING RETAIL MARKETS Paris is one of the world leading markets for In 2016, Paris was the 5th largest in the world. high end retail, and continues to develop its The investment market has grown steadily impressive shopping centres and department over the years with a 10-y average of €14 bn. stores. Examples of this are the new Louis Vuitton flagship on Place Vendôme that will open in 2017 and the recent re-opening of A STRONG RECOVERY the ‘Forum Des Halles’ shopping centre in 4 IN THE OFFICE MARKET the heart of Paris after an impressive redevelopment. With a constant reduction of vacancy rates during the last 3 years from 7.4% in 2013 to THE HIGH END RETAIL MARKET HAS 6.7% as of the end of 2016, the market has shown a strong recovery. 8 SEEN IMPRESSIVE RENTAL GROWTH OVER THE LAST 5 YEARS

Global brands battle for the best locations on LIMITED OFFICE SUPPLY the Champs-Elysees, Avenue Montaigne, Rue 5 St Honoré and other famous addresses. New With low vacancy rates, limited supply and ‘hot spots’ are also developing such as the rue a recovering economy, prime rents are des Francs-Bourgeois in the Marais. forecasted to increase in the mature and core business districts of the Paris region, and there have already been recent signs of growth – such as the Paris ‘Opera’ area. 9 LOGISTICS HOTSPOT The suburbs of Paris form part of the prime European logistics axe, conviniently located close to main airports and along main 6 GENUINE MARKET TRANSPARENCY motorways and ring roads. The logistics France is in the top 5 markets in the globe market has been very strong in 2016 with the for transparency. BNP Paribas Real Estate is letting transactions of large e-commerce a member of ‘Immostat’ pooling commercial tenants and investments sort after by global property research with all the main real investors. estate advisors. 10 THE PLACE TO BE FOR HOTELS France is still the world leading for the tourist industry, and has some of the finest hotels. There have been some significant renovations such as the recent re-opening of the Ritz on Place Vendôme and current renovation of the Crillon on Place de la Concorde.

7 MAIN OFFICE MARKETS

PARIS OVERVIEW PARIS Where to invest in Greater Paris? The French capital has numerous established business districts that we will discover in the following pages.

BOIS DE BOULOGNE

BOIS DE VINCENNES

PARIS CBD WESTERN CRESCENT INNER SUBURBS Extended CBD Neuilly/Levallois Northern Inner Rim PARIS OUTSIDE CBD Southern River Bend Eastern Inner Rim Péri-Défense Southern Inner Rim Paris Left Bank Northern River Bend Paris Centre East OUTER SUBURBS LA DÉFENSE

8 PARIS CBD*

CBD* With 569,000 m² prompting investors to resume refurbishment taken-up in the schemes there, and new buildings are broader Paris Central expected to be completed in 2017 and 2018. BOULOGNE Business District in Rental levels have risen in the CBD Etoile and 2016, volumes remained stable in the CBD Opéra. remained high and well above the 10-year average (481,000 m²), despite a very slight downward trend (-2%) compared to 2015. 9 deals for large units (over 5,000 m²) were signed in 2016, including 3 deals for over 10,000 m² : Banque de France in “In Town” building (18,800 m²), Siaci Saint Honoré with 14,300 m² in “Season” and Wework with 11,700 m² at 33 rue Lafayette. Vacancy rates in the CBD have been declining since 2013 and are the lowest within Paris Region. With only 2.5% of empty premises, vacancy in the CBD Opéra has even reached a record-low level. As such, the buoyancy of the Paris CBD office market and the current low level of supply are

*Paris extended CBD: all of the 1st, 2nd, 9th, 16th and 17th districts

2016 LETTING KEY FIGURES 2016 INVESTMENT KEY FIGURES

AVERAGE RENTS (new offices) €4.2 bn Office investment 2 2 €700/m (Etoile) €686/m (Opéra) vs €2.7 bn 10-year average PRIME RENTS 3.15% prime yield €790/m2 (Etoile) €800/m2 (Opéra) €13,500/m² average capital value TAKE-UP 3.65% average yield 569,000 m2 take-up vs m2 take-up 10-year average 481,000 4.1 % vacancy rate

9 MAIN OFFICE MARKETS

OVERVIEW PARIS PARIS OUTSIDE CBD

Centre East Paris Left Bank Paris Centre East Thanks to the healthy Even though the traditional business trend of take-up for districts in Paris Centre East are mainly large units (12 deals), located near Gare de Lyon, northernmost BOULOGNE especially in the arrondissements of Paris are progressively well-established office gaining in importance, with several large districts in the 13th deals in 2016, such as BNP Paribas in and 15th arrondisse- Millénaire 1 and 4 (respectively 23,300 m² ments, volumes have and 24,000 m²) in Paris 19. Supply within significantly risen in a year has been slightly decreasing for Paris Left Bank and came in at 296,000 m² in 3 years, and reached 340,000 m² on 2016 (+35% vs. 2015). The largest transactions December 31, 2016. Paris Centre East is were the acquisition of 25,800 m² by Altice currently undersupplied, encouraging Media in Qu4drans and the leases of Le Monde speculative building starts, and new (18,600 m²) in A2 and of Les Echos (17,750 m²) buildings are currently under construction in 10 Grenelle. Most buildings in Paris Left and are expected to be completed in the Bank are taken-up before completion, and 2 coming years. availability within a year has plummeted, down 41% vs. end 2015. 2016 LETTING KEY FIGURES 2016 INVESTMENT KEY FIGURES AVERAGE RENTS (new offices) €2.5 bn Office investment /m2 (Left Bank) /m2 (Centre East) €540 €443 vs bn 10-year average €2.3 PRIME RENTS 3.50% prime yield €670 /m2 (Left Bank) €570/m2 (Centre East) €8,100/m² average capital value m2 availability within a year 362,000 5.10% average yield vs 463,000 m2 10-year average TAKE-UP 552,000 m2 take-up vs m2 take-up 10-year average 356,000 3.5 % vacancy rate

10 LA DÉFENSE

La Défense Located on the within a year was particularly low, as it western outskirts of represented 36,000 m², while major Paris, La Défense is completions of new buildings are not Europe’s largest expected before 2018. The vacancy rate purpose-built decreased in 2016, and reached 9% at the end business district. of the year. Incentives decreased over the Whereas 2015 was year, to average 24% over 2015. disappointing for the take-up at La Défense, volumes reached outstanding figures in 2016, where 275,000 m² were taken-up (+93% vs. 2015). Transactions rose on all unit segments, especially in deals > 5,000 m², as 11 were signed, including 2 for over 40,000 m² : Saint-Gobain (49,000 m² in “M2” building) and RTE (40,500 m² in “Window”). Thanks to the quality of its supply and to particularly attractive prices, La Défense currently enjoys a favorable backdrop, and has proved very attractive for outsider companies, and accounted for 22% of deals > 5,000 m² in the Paris Region, representing a 10-year record. New supply

2016 LETTING KEY FIGURES 2016 INVESTMENT KEY FIGURES AVERAGE RENTS (new offices) €2.3 bn Office investment /m2 (New) /m2 (Second hand) €505 €407 vs bn 10-year average €1.3 PRIME RENTS 4.75% prime yield €550/m2 (New) €7,500/m² average capital value m2 availability within a year 381,000 5.50% average yield vs 365,000 m2 10-year average TAKE-UP 275,000 m2 take-up vs m2 10-year average 182,000 9.0% vacancy rate 11 MAIN OFFICE MARKETS

PARIS OVERVIEW PARIS WESTERN CRESCENT

Neuilly/Levallois Southern River Bend Take-up came in to 107,000 m² in 2016, i.e. After a record-breaking year in 2015, the office an increase of 26% over one year, especially take-up in the Southern River Bend – the area thanks to the dynamic trend of small and with cities such as Issy-les-Moulineaux and medium sized units (+54% vs last year). Boulogne – fell by 44% in 2016 and came in at Availability within a year slightly increased, 166,000 m², just below the 10-year average and the vacancy rate reached 10.6% at the (185,000 m²). This decline applied to both end of the year. Future supply should see small and medium-sized units as well as to several new or refurbished units being major deals. Meanwhile availability within completed, such as Thais, Ecowest and Hub a year amounted to 369,000 m², and shrank buildings in Levallois, and Think and Kosmo by 6% over the year. Several schemes are due in Neuilly. Rents for new premises decreased for completion in 2017 and 2018, for instance in Neuilly and remained steady in Levallois Quai Ouest (15,600 m²), Aquarel (30,000 m²) in 2016. and Switch (45,000 m²).

Northern River Bend

Péri-Défense Neuilly/Levallois

PARIS

Southern River Bend

12 Péri-Défense Northern River Bend Péri-Défense – the area surrounding La The main office markets in the Northern River Défense and a traditional spill-over district Bend are close to the Seine River or transport – saw 130,000 m² transacted over the year hubs, often on renovated former industrial 2016, i.e. a drop of 29% compared to 2015. sites. Take-up on the Northern River Bend Whereas the market was buoyant in 2015 for came to 69,000 m², far from the 10-year large units, only 4 deals > 5,000 m² were average of 105,000 m². Three large deals signed in 2016, among which Franfinance were signed in 2016: Sage and Bayer (13,700 m²) in the “Spring” building in (9,450 and 5,300 m² in the Atrium Défense Nanterre and GSK (8,900 m²) in “Mozaik” in building at La Garenne Colombes) and Rueil-Malmaison. However, supply within a Credipar (9,000 m² in Pointe Métro 2 at year is very high, and the vacancy rate is the Gennevilliers). The vacancy rate has highest in Paris Region (15.9%). significantly compressed but remains high (12.7%) while the availability within a year was well above the 10-year average.

2016 LETTING KEY FIGURES 2016 INVESTMENT KEY FIGURES

AVERAGE RENTS (new offices) €4.4 bn Office investment /m2 (Southern River Bend) €440 vs bn 10-year average €2.5 €464/m2 (Neuilly/Levallois) prime yield €343/m2 (Péri-Défense) 3.65% €287/m2 (Northern River Bend) €5,600/m² average capital value PRIME RENTS 5.50% average yield €460/m2 (Southern River Bend) €540/m2 (Neuilly/Levallois Bend) TAKE-UP 1,184,000 m2 availability within a year vs m2 10-year average 1,153,000 472,000 m2 take-up vs m2 10-year average 527,000 12.2% vacancy rate

13 MAIN OFFICE MARKETS

PARIS OVERVIEW PARIS INNER SUBURBS Northern Inner Northern Inner Inner Suburbs. This marks a decline of about Suburbs Eastern Inner Suburbs 30% since the end of 2015. New supply has Suburbs Take-up on the been almost nonexistent since 2013, Northern Inner representing just 2% of the overall total. Suburbs came to Thanks to the large deal of RATP in l’Elyps in VINCENNES 75,000 m² in 2016. Fontenay-sous-Bois (32,500 m²), take-up Southern Very few building reached 85,000 m² and almost doubled vs. Inner Suburbs completions are 2015. expected in the two coming years, with only two buildings currently Southern Inner Suburbs under construction – Opalia, 11,000 m² in Saint- About 94,000 m² was taken-up in the Southern Ouen and Pulse, 27,000 m² in Saint-Denis – and Inner Suburbs in 2016, i.e. a 47% rise vs. 2015. the majority of supply is made up of second hand The supply within a year remains relatively buildings. high high with 292,00 m² including 75,000 m² of new supply. With the strong letting market Eastern Inner Suburbs and the limited future supply, we are expecting Availability within a year came in at a decrease of the available spaces. 79,000 m² at the end of 2016 in the Eastern

2016 LETTING KEY FIGURES 2016 INVESTMENT KEY FIGURES

AVERAGE RENTS (new offices) €2.2 bn Office investment /m2 (North) €265 vs €1.7 bn 10-year average €260/m2 (East) 4.35% prime yield /m2 (South) €307 €4,872/m² average capital value m2 availability within a year 744,000 5.51% average yield vs m2 10-year average 746,000 TAKE-UP 254,000 m2 take-up vs m2 10-year average 340,000 7.8% vacancy rate

14 OUTER SUBURBS

With 301,000 m² transacted over 2016, 14% of the total, which is not enough to take-up in the Outer Suburbs decreased by attract major occupiers. Lowest-performing nearly 10% vs. 2015, and fell short of its buildings need to be refurbished to rebalance 10-year average of 390,000 m². There were supply and attract new occupiers. just 6 transactions for units over 5,000 m², The office stock in the Outer Suburbs stands totaling 71,000 m², including Sofinco (36,200 at 18.5 million m². The most represented m² in Massy), Aéroports de Paris (9,500 m² in business sectors in the Outer Suburbs in 2016 Orly) or Groupe Bertrandt (7,400 m² in Vélizy- were ICT, bank-finance-insurance and Villacoublay). industrial groups. The vacancy rate over the Meanwhile, availability within a year has past 10 years ranged from 4.6% in 2006 been particularly stable compared to last to 6.6% in 2010. Rents for new offices in year, and still stood at approximately 2015 are lower than the 10-year average of 1.1 million m². New supply only accounts for €210/m²/year.

2016 LETTING KEY FIGURES 2016 INVESTMENT KEY FIGURES

AVERAGE RENTS (new offices) €485 m office investment /m2 (new offices) €206 vs €750 m 10-year average m2 availability within a year 1,112,000 5.50% prime yield vs m2 10-year average 1,152,000 €2,400/m² average capital value TAKE-UP 6.80% average yield 301,000 m2 take-up vs m2 10-year average 370,000 5.7% vacancy rate

15 BNP PARIBAS REAL ESTATE

PARIS OVERVIEW PARIS TRACK RECORD

2016: SELECTION OF KEY DEALS

Vendôme Saint Honoré - Paris – 1st district Surface: 26,800 m² Purchaser: NBIM

Matignon - Paris – 8th district Surface: 7,300 m² Purchaser: French institution

16 So Ouest - Levallois Surface: 33,300 m² Purchaser: Samsung / La Française REP

Novartis Campus - Rueil-Malmaison Surface: 42,200 m² Purchaser: KIS / Etoile Properties

17 RETAIL MARKETS

With €4.9 bn investment volumes in 2016,

PARIS OVERVIEW PARIS retail investment still benefits from a strong appetite from both French and international investors. Indeed, the retail asset class went beyond its safe-haven status and now represents a significant weight in investors’

OPENEN strategic asset allocation.

Bruno Ancelin Head of Retail Capital Markets BNP Paribas Real Estate

2016 MARKET TRENDS

STRONG APPETITE FROM INVESTORS ON THE THREE RETAIL ASSET CLASSES :

• High-street: the most sought-after retail Overall, the market suffered from a lack of asset class. 51 % of the transacted volume available products in 2016. Regarding the in 2016 current transaction pipeline, we expect 2017 supply to be higher, especially in • Shopping centre: significant transactions shopping centres. in 2016 despite a lack of Core products

• Out-of-town retail: institutional investors confirmed their interest in this asset class (+20% vs FY 2015)

FOCUS ON PARIS PRIME RETAIL AXES

Champs-Élysées Thanks to their international showcase status the Champs-Elysées avenue remains the most sought-after retail address in Paris with prime rent culminating to € 22,000 / m²/ year. The avenue is in a microcosm of its own and is gearing up for another big bang with the scheduled arrival of Galeries Lafayette and Apple in 2018.

18 Saint-Honoré / Faubourg Saint-Honoré Faubourg Saint-Honoré is considered as the historical luxury heart of Paris. Rents are pressured by a high demand from international luxury brands to open new flagship stores, and due to the lack of availability in its best locations (close to the rue de la Paix), the luxury part of Faubourg Saint-Honoré is now expanding further with the recent openings of the Baccarat, Cifonelli and Rimowa flagship stores near the Bristol Palace Hotel. Since 2010, rue Saint Honoré has benefited from the lack of supply on Faubourg Saint- Honoré, and has attracted more than 20% of luxury brands openings in France. Rue Saint- Honoré is now the most prized address in Paris, as illustrated by the recent opening of Tory Burch, Fendi, Alexander McQueen, the renovation and future opening of respectively Chanel & Louis Vuitton flagships, and has led to major investment transactions such as Roberto Cavalli and the €1 bn Vendôme-Saint- Honoré deals. Rivoli / Marais In addition with the partial renovation of Les Halles, the current works at the Samaritaine makes rue de Rivoli attractive again, several high-end and luxury brands have already signed for flagship stores around the LVMH and Chanel projects. Le Marais is now one of the most active districts in terms of openings. It is flourishing by attracting luxury and high-end brands seeking competitive rents in this new trendy and touristic area, which results in a fierce competition on the main axes: Archives, Francs-Bourgeois and Rosiers. Demand for large pop-up flagship stores is rising as brands wish to test their concepts such as Chanel in the Hotel des Ambassadeurs de Hollande. BHV Marais, which now opens on Sundays, has given itself a makeover by installing Givenchy, Moncler, Fendi and Gucci on Rue des Archives.

19 RETAIL MARKETS

2016: SELECTION OF KEY DEALS PARIS OVERVIEW PARIS

HIGH STREET Davidor / Armani - avenue Montaigne – 8th district of Paris Purchaser: Ponte Gadea

SHOPPING CENTRE Domus - Rosny-sous-Bois Purchaser: Catalyst

OUT-OF-TOWN RETAIL Retail Park - Claye Souilly Purchaser: Frey

20 CLIENT INTERVIEW

France is of a particular interest in and extension of the Cergy 3 Hammerson’s strategy as Fontaines shopping centre, and a it represents 22% of the Group 7,000 m² extension of Italie 2 total proprietary investments. within the City of Paris “Reinventer Hammerson France portfolio Paris” tender process. is composed of 9 shopping • Continue to look for new centres totaling €3.5 bn in value Jean-Philippe Mouton, investments and innovative among which 70% are the Group Chairman of Hammerson projects through acquisition proprietary investments. France opportunities. Ile-de-France is definitely a Île-de-France remains the strategic location for the Group with 55 % of economic heart of the country, and the our investment portfolio concentrated in the breakthrough of the Grand Paris project will region. reinforce this attractiveness. In addition, the Our strategy for the next 2 years is based on region is the most sought-after location in two major axis: France for international investors thanks to • Improving our current portfolio and creating robust economic fundamentals and a strong value in investing more than €230M in resilience of the retail market and rental different projects in Île-de-France : renovation values.

2016 KEY FIGURES

2nd European market Retail investment benefits from a good product mix : in terms of retail consumption High-street: 51 % of the investment volume generating €490 bn turnover in 2016 out-of-town retail : 28 % shopping centre: 20 % With €4.9 bn investment volume, 2016 is the rd 3 best year for Retail Investment in France 200,000 m² of retail transacted in 2016 by BNP Paribas Real Estate Investment volume is spread between Paris region (54%) and the rest of France (46%)

21 LOGISTICS MARKETS

Investors’ appetite for the logistics sector in the

PARIS OVERVIEW PARIS Eurozone is increasingly strong. France maintains its position as the 3rd largest historic market in Europe with investments of more than €1.7 bn. The Ile-de-France region absorbed nearly 60% of volumes invested in 2016.

Franck Poizat Head of Logistics Capital Markets BNP Paribas Real Estate

2016: MARKET TRENDS

• Investors from the services sector are • In 2016 there has been a rise in speculative moving towards the logistics sector and development. More and more investors are focusing on its more profitable assets. attracted by: - speculative development, due to a rental • Current low interest rates offer market boosted opportunities to the more Core / Core + - e-commerce European funds, which still represent a - the reorganisation of the supply chain large majority of the market with nearly and of the main mass retail players. 75% of the invested volumes.

2016: SELECTION OF KEY DEALS

Gemini Wolf Forlog - - - Surface: 207,473 m² Surface: 357,500 m² Surface: 539,000 m² Purchaser: Tristan Capital Purchaser: York Capital Purchaser: RedTree Capital

22 FOCUS ON PARIS LOGISTICS HUBS

A significant part of the prime European logistics market is located in the suburbs of Paris, especially close to the main airports and along the main transportation routes. With 1.7 million m² transacted over the year in 2016, Paris Region remained by far the largest logistics market in France.

Main logistics hubs in Paris Region

LOGISTICS IN ILE-DE-FRANCE

Global park: 17 million m² 80% of the areas concentrated in 9 logistics hubs Top 3 includes Roissy and Sénart Centre Essonne 900,000 m2 take up in 2016 3 airports and 8 motorways

2016 KEY FIGURES (FRANCE)

Logistics investment: €1.7 bn Prime yield: 5.50% vs 10 year-average: €1.3 bn Average yield: 6.65%

23 HOTEL MARKETS

With more than 82.5 million tourists visiting

PARIS OVERVIEW PARIS France in 2016, France kept its position as the most popular tourist destination in the world, despite visitor figures recording a slight drop from 85 million in 2015 related to the events in Paris in November 2015 and Nice in July 2016.

Bruno Juin Managing Director Hotels Capital Markets BNP Paribas Real Estate

2016 KEY FIGURES

€3.5 bn invested in the sector in 2016, showing a slight drop compared to the volume recorded in 2015 but exceeding the 5-year average

rd 3 most active / liquid / dynamic European market for hotel investment, after Germany and the UK 56% Hotel investment in France remains concentrated of the total volume of investment on the Ile-de-France region, representing 56% of the total volume and 80% of individual asset transactions

International investors are principally focused on the city of Paris

24 THE FRENCH CAPITAL RECORDED FOUR TRANSACTIONS EXCEEDING €100 m:

The Sofitel Paris Le Faubourg sold for an The hotel supply in Paris is benefitting from an estimated €162 m to Joint Treasure overall improvement of product quality, with International. some of the major landmark luxury hotels having recently undergone extensive Two Pullman properties were acquired by renovations and expansion programmes. The French investors, with the aqcuisition of the most notable re-opening in 2016 concerned Pullman Tour Eiffel by Amundi Immobilier the 5-star Palace Ritz hotel, which reopened and the sale of the Pullman Paris Bercy to its doors after a four-year refurbishment. BNP Paribas Cardif. New and innovative concepts in the budget The end of the year saw the sale of 1,025-room and mid-scale segments are also making their Le Méridien Étoile, Paris' largest capacity way onto the parisian hotel scene, with brands hotel, to London-based investment firm such as MotelOne, CitizenM, 25Hours and Henderson Park, for an estimated amount of Zoku. €365 m.

With an ever-solid market base, the outlook for the French, and in particular the Parisian, hotel investment market remains soundly positive.

The Palace Ritz Hotel (Place Vendôme)

25 NEED TO KNOW KEY LEGAL & TECHNICAL TERMS

INVESTOR TOOLKIT INVESTOR The law firm Baker McKenzie gives you the legal keys to understand the French property market

REAL ESTATE INTEREST

The term "real estate" includes: • the land, soil and sub-soil • any buildings or structures built on it.

Real estate property is held by: ownership or lease agreement.

MAIN PERMITS OR LICENSES REQUIRED REGISTRATION OF REAL ESTATE INTEREST FOR BUILDING OR OCCUPYING REAL ESTATE Documents transferring real estate properties located in France must be As a matter of general principle, a demolition published at the Land Registry (fichier permit and/or a building permit will have to immobilier) in order to be binding upon third be obtained if a building is to be built or if a parties. To this end, the deed of sale of a real building is to be demolished and rebuilt or estate property must be drawn up by a renovated. Notary. Leases whose duration exceed twelve (12) years must also be published in As regards to the use of premises, especially the Land Registry. in the Paris area, French Construction and Dwelling Code (Code de la Construction et de l'Habitation) provides that premises with residential use cannot have any other use NATIONALITY RESTRICTIONS unless specific authorisation is obtained ON REAL ESTATE OWNERSHIP from relevant public authorities.

There are generally no restrictions on Specific authorisation (CDAC) is also needed foreign ownership of French real estate, to open retail premises with a sales area in which is subject to obtain very few excess of 1,000 m2. To this extent, The Pinel authorisations and where administrative law dated June 18th 2014 and a decree dated declarations shall be made, as the case may February 12th 2015 create a common process be. However, exchange control applies to for the application of a building permit and real estate activities and may trigger filing an autorisation to open retail premises at the obligations for statistical purposes. same time.

26 BINDING AGREEMENTS FOR SALE and assignment of the Lease, service charges Parties are legally bound as soon as they and taxes that may be e-invoiced to tenant. execute a reciprocal sale and purchase The duration of commercial leases cannot be agreement under conditions precedent and/ less than nine years. Other provisions, such as or a final sale and purchase agreement. maintenance and repairs, are governed by Legal provisions of the French civil code. However, under French law, a sale is binding French regulations on commercial leases have between vendor and purchaser as soon as been amended by the so called Pinel law there is an agreement on the subject matter June 18th 2014 and related decree November 3rd of the transaction and on the price. As a 2014, which are protective for tenants and consequence, an unqualified offer letter prevent triple net leases. This decree notably made by a purchaser which is duly accepted lists service charges and taxes that cannot be by the vendor could result in a binding sale borne by tenants. Pursuant to a decree and purchase agreement. (ordonnance) enacted on the 10th of February 2016 applicable to agreements entered into as as of the 1st October 2016 (please see above), different sections of the French civil code, which may impact lease agreements, have been modified.

Ground Lease (Bail à construction): is a lease under which a tenant undertakes to construct buildings on landlord's plots of land and to maintain these buildings in a good state of repair. The term of the ground lease will be between 18 years and 99 years. Ground leases Finally, and pursuant to a decree grant an immovable property right to tenant. (ordonnance) enacted on February 10th 2016 During ground lease term, the tenant will applicable to agreements entered into as of remain the owner of the constructions. Upon the 1st of October 2016, obligation to termination, landlord will become the owner negotiate and to execute agreements in good of the constructions and improvements. faith has been reinforced. Different sections of the French civil code, which impact Residential lease: applies to property, which is agreements for sale, have been also modified. in France, regulated by specific rules. As a matter of general principle, a residential lease is entered into for six years if the landlord is a company or for three years if the landlord is USUAL FORMS OF LEASES an individual.

Commercial lease: applies to premises in Derogatory lease: is a short term lease subject which a business is carried out. The French to the provisions of the French civil code. Such commercial code, governs the duration, lease can be granted for a maximum total renewal and termination of commercial leases, period of 3 years upon the initial occupation of rent review, use of the premises, sub-letting the rented premises by tenant.

27 NEED TO KNOW KEY LEGAL & TECHNICAL TERMS INVESTOR TOOLKIT INVESTOR

TERMINATION OF COMMERCIAL LEASE FINANCING OF SECURITY OF TENURE REAL ESTATE INVESTMENTS

As a matter of general principle, the landlord Real estate investments are generally cannot terminate a commercial lease during financed with equity contributions and with the contractual period. However, the tenant a bank financing. Real estate bank financing benefits from a triennal right of termination, are usually structured as mortgage backed the tenant may contract out of such triennial loans (secured by a mortgage over the right of termination in certain circumstances financed property and as the case may be, depending on the nature of the rented by other security interests over the premises and on the lease duration. This right borrower's assets, e.g. rent receivables, to depart from tenant’s triennial right of insurance receivables, and over the shares termination has been limited by the so-called of the borrower), enabling the lender to Pinel law. Notice to quit must be delivered by benefit from a priority ranking over the a process-server (Huissier de justice) or, in borrower's assets and cash-flows. certain cases, by registered letter six months in advance. Security of tenure is an essential aspect of French regulations on commercial ENERGY PERFORMANCE REQUIREMENTS leases and is the right of tenant to obtain FOR BUILDINGS renewal of the commercial lease upon its expiry. Landlord cannot refuse to grant this Different French Laws enacted over the past renewal without paying compensation for few years provide for minimum energy eviction to the tenant. efficiency requirements for existing and new buildings.

A specific energy efficiency report (Diagnostic de performance énergétique) has been created which states the quantity of energy used according to the type of use of the building. This report shall be communicated to purchasers and tenants.

Since Pinel law, landlords must inform tenants every three years of work completed in the rented premises during the last triennial period and on works provided over the next triennial period.

28 FRENCH GREEN LEASES

An environmental annex detailing the energy consumption in the building, the technical equipment located in the building, landlords’ and tenants' respective obligations must be attached to office or retail leases.

This applies to new leases entered into as of the 1st of January 2012 and to ongoing leases or renewed leases as of July 14th 2013 for surface areas in excess of 2,000 m2.

The content of this annex is detailed in decrees enacted on December 30th 2011 and April 12th 2012.

ENVIRONMENTAL LAWS AFFECTING THE USE AND OCCUPATION OF REAL ESTATE

French Environmental Code (Code de l’Environnement) set specific standards and regulations affecting the use and occupation of real estate. For instance, specific authorizations and/or administrative approvals and/or declarations are required by environmental legislation for starting or ceasing operation of a classified facility (Installation classée) such as storage and manufacturing activities.

29 NEED TO KNOW ACQUISITION: HOW FRANCE IS POSITIONED

INVESTOR TOOLKIT INVESTOR RELATIVE TO ITS EUROPEAN NEIGHBOURS

FRANCE GERMANY ENGLAND & WALES SPAIN ITALY

• Freehold or other rights in rem, either • Ownership; • Full ownership; securing an obligation (mortgage) or granting • Usufruct; • Condominium or partial ownership; a limited right over the property (usufruct, • Right in rem entitling its holder to build How can real estate Ownership or Lease agreement. Ownership or lease agreement. • Hereditary building right (real estate - like right in rem entitling other rights of use, or right to build); on land owned by a third party (" diritto di be held? its holder to build on land owned by a third party). • Leasehold (which can be registered with the superficie"); Property Registry). • Condominium or partial ownership.

What rights over Italian Civil Code provides that all documents real property are transferring and/or encumbering real estate properties (including, inter alia,(i) deeds Some specific real estate rights need to be establishing rights in rem over real estate required to be registered in order to be effective, such as Rights in rem over real estate require registration, including: All documents transferring or encumbering - including, but not limited to, easement All documents transferring or encumbering real mortgages or rights to build. However in registered? • Ownership; real estate properties must be registered at the rights, surface rights, usufruct, rights of estate properties must be published at the Land general terms, real estate rights are not • Easements, pre-emptive purchase rights, usufruct rights, Land Registry in order to be binding upon third use, pre-emptive purchase rights -, (ii) sale Registry (fichier immobilier) in order to be binding required to be registered to be effective, but priority notices and hereditary building rights; parties. Please note that leases for seven years and purchase agreements (preliminary and upon third parties. in practice any transfer of real estate assets is • Land charges, mortgages and easements. or less are not registrable. definitive), (iii) land charges and mortgages, What property registered in order to benefit from the publicity (iv) lease agreements (having a duration provided by the Property Registry. documentation exceeding 9 years) shall be registered with the public register in order to be enforceable do you need to ("opponibile") vis-à-vis third parties. register?

No. Spanish law has adapted its foreign rules to a system of general liberalisation, without distinguishing between EU residents and non- Are there nationality Generally no restrictions except under certain EU residents. Generally, no restrictions apply to foreign ownership of German Generally, no restrictions apply to foreign circumstances where exchange control provisions No. Depending on the specific investment carried restrictions on land real estate. ownership of Italian real estate. trigger filing obligations. out, a number of administrative requirements ownership? must be met, generally after an investment (or Liquidation of an investment) is made, with the Spanish Foreign Investment Registry. Any party can prepare the relevant Usually, seller's lawyer prepares the first draft documentation. Generally, the purchaser's Who usually Typically, seller's lawyer prepares the first draft of the sale of the sale and purchase agreement to be lawyers prepare the initial draft of the and purchase agreement which is then marked-up by buyer's The Seller's legal counsel in marked-up by buyer's lawyer and subsequently produces the In case of direct sale of real estate properties, purchase agreement. Such agreement, when lawyer and then subsequently negotiated until a final agreement relation to asset sales and also, usually, in negotiated until a final agreement is reached. French notaries, and in case of indirect sale, any final, is inserted in a public deed which is documentation is reached. If the parties are not represented by lawyers, the relation to indirect sales (share sales). Such agreement needs to be entered into Legal counsel. authorised by a Notary Public. German notary recoding the sale and purchase agreement before a notary public and registered with the Apart from very specific exceptions, only Public in real estate prepares the draft documentation. competent public register. Deeds authorised by a Notary Public have transactions? access to the Property Registry. • Due Diligence report. Depending on the specific asset, a technical or environmental report is also usually requested by the purchaser; • Offer letter; • Offer letter; • Reservation or Promise of sale and purchase What are the main • Sales memorandum/prospectus; • Offer letter; • Due diligence report; • Due diligence report; under conditions and penalties in case of • Due diligence report; • Due diligence report; • Promise or preliminary sale and purchase • Promise or sale and purchase agreement under relinquishment; documents involved • Sale and purchase agreement; • Sale contract; agreement under conditions precedent; conditions precedent; • Purchase Agreement. The Purchase • Finance Documents; • Transfer. • Final sale and purchase agreement to be in a real estate • Final sale and purchase agreement; Agreement is sometimes replaced by an • Asset/property/facility management agreements. executed before a notary public. acquisition? • Finance documents. Option to Purchase, granting the beneficiary the right to proceed with the purchase of the property within an agreed period of time; • Transfer Deed to be executed before a Notary Public.

30 FRANCE GERMANY ENGLAND & WALES SPAIN ITALY

31 NEED TO KNOW LETTING: HOW FRANCE IS POSITIONED

INVESTOR TOOLKIT INVESTOR RELATIVE TO ITS EUROPEAN NEIGHBOURS

FRANCE GERMANY ENGLAND & WALES SPAIN ITALY

• Ground leases (whereby the tenant undertakes to • Commercial leases; • Ground leases (where the tenant undertakes • Residential Lease; • Commercial leases; What are the usual construct buildings on landlord's plot of land); • Residential leases; to construct buildings on landlord's plot of • Non-Residential Lease; • Residential leases. • Commercial leases; • Tenancy agreements (Pachtverträge); land); A Non-Residential Lease is a lease the main forms of real estate • Residential leases ; • Ground leases (Errbaurechts vertrag). • Commercial leases; purpose of which is different from that of the leases? • Derogatory leases. • Residential leases. Residential Lease (i.e. commercial, industrial, services, etc.).

Certain provisions mainly relating to the duration, Generally, commercial lease provisions can be widely negotiated Yes. The Non-Residential Leases are, in principle, Certain legal provisions mainly relating to the Are commercial to service charges and to the tenant’s right of between the parties. However, if lease provisions qualify as governed by the will of the parties, and failing duration, rent and tenant's right of withdrawal renewal are mandatory. Other provisions not general terms and conditions, they are subject to a particular that, provisions of the Urban Leases Act are are mandatory. While other provisions are lease provisions covered by the French commercial code are freely scrutiny and have to comply with a specific set of statutory Mandatory (Ley de Arrendamientos Urbanos or freely negotiable. freely negotiable? negotiable. provisions and case law to be valid. L.A.U.) of 1994. Additionally, the Civil Code is However, parties may depart from the above supplementary. mandatory provisions in those commercial leases where the annual rent is greater than €250,000 and the leased premises are not qualified as historic premises under a provision of the relevant municipality or region.

Commercial leases cannot be less than 9 years, Commercial leases may have an indefinite term subject to No. The term is freely agreed between the parties. Pursuant to Italian Law, commercial lease Is there a maximum but may be entered into for a longer term. Tenants termination within the statutory or contractually agreed notice Leases longer than seven years must be In case it is not agreed or determined, the agreements shall have a minimum duration benefits from a triennial right of termination but it periods. Generally, fixed terms must not exceed a term of registered at the Land Registry. provisions of the Civil Code will apply. As a equal to 6 years (9 years in case of hotel use); in term for commercial may contract out such right, under conditions. 30 years. A lease agreement providing for a fixed term of more general rule, if the term of the lease is not any case, commercial leases can not... exceed a leases? Commercial leases longer than 12 years must be than 30 years will be deemed a lease having an indefinite term specifically indicated, it wilL be the same as the term of 30 years. A lease agreement providing published with the Land Registry. after 30 years, and then be subject to termination within the rent payment term. for a fixed term of more than 30 years will be statutory notice periods. deemed a lease having a 30 year term.

Commercial rents may be indexed on an annual Rents under commercial leases binding the landlord having Generally an 'open market' basis but the Rents are reviewed through the system agreed Commercial rents may be indexed on an How are commercial basis. However, an Index is only valid if it relates a term of at least ten years may be linked to the consumer parties can agree indexation or any other basis. by the parties. The most usual systems to carry annual basis linked to the consumer price directly to the object of the contract or the activity price index published by the German Federal Statistic Office. out such review are: index published by the Italian Statistic Office rents reviewed? of one of the parties (generally an index published Commercial leases may also provide for a stepped rent or a • Review to adapt the rent to current market (ISTAT). Commercial leases can not provide for a by the French State Statistical Institute is chosen by lease review clause instead to adjust the rent to fair market rent value. This could be through appraisal by a stepped rent or a lease review clause to adjust the parties). In addition, legal rent review can occur at the time of renewal or extension. real estate expert; the rent to fair market rent. every three years if specific criteria are met. • Review to adapt the rent to the Consumer Parties may agree that rent is indexed on Price Index (IPC); another basis in those commercial leases • By establishing a scale of rent increases where the annual rent is greater than €250,000 through the rent term. and the leased premises are not qualified as historic premises under a provision of the relevant municipality or region.

• Repairs and maintaining the structure of rented • Hand over the leased space in the agreed condition; This will depend on the terms agreed between The basic obligation of the landlord is to • Hand over the leased space in the agreed What are the basic premises (generally major repairs); • Repair and maintenance the roof and shell of the property, as the parties. guarantee that the tenant enjoys peaceful condition; • Insure the rented premises. well as common areas; Usually in a multi-occupied building the possession of the property through the • Repair and maintain the structure of the obligations of • Insure the rented property. landlord retains responsibility for repair of the lease term and can use it for the purposes rented premises (generally major repairs); landlords? structure, common parts and insurance and established in the lease agreement. This means • Insure the property. is reimbursed via a service charge. However, that the Landlord shall undertake, at his/ • Warrant the peaceful enjoinment of the in single let buildings, particularly for a non- her own cost, all necessary works to keep the rented premises during the lease period. office use, the tenant will assume liability for property in the agreed conditions to be enjoyed the repair of the entire building and also for by the tenant. In some cases, such works may insurance. entitle the landlord to increase the rent; • Under certain circumstances, the landlord might be obliged to indemnify the tenant in case of refusal of extension of the lease term once the initially agreed expiries.

• Pay rent and service charges; • Pay rent and service charges; • Pay rent and service charges; • To pay rent and service charges; • Pay rent and service charges; What are the basic • Keep the rented premises in good maintenance • Keep the rented premises in good maintenance and repair; • Keep the rented premises in good maintenance • To keep the leased premises in good • Keep the rented premises in good and repair; • Insure its belongings and goods within the rented premises as and repair; maintenance and repair the damages to maintenance and repair the damages; obligations of • Insure its belonging, merchandise and goods well as other risks connected with the activities carried out in • Insure its belongings, merchandise and goods the property caused by the tenant or by • Insure the leased property its belongings and tenants? within the rented premises. the premises. within the rented premises. (but please see normal use. goods within the rented premises as well comments above in relation to single let buildings). as other risks connected with the activities carried out in the premises.

32 FRANCE GERMANY ENGLAND & WALES SPAIN ITALY

33 TAX CLINIC This overview highlights the potential tax consequences of direct or indirect investments in French real estate INVESTOR TOOLKIT INVESTOR by non-resident investors. In this respect, Baker McKenzie has outlined below the principle tax issues raised by the acquisition, rental and sale of French real estate by foreign investors, both individual and corporate.

1 ACQUISITION OF THE FRENCH REAL ESTATE: VAT AND TRANSFER TAX

In principle, transactions relating to less performed by person or entities which are than 5-year old buildings are subject to VAT not liable to VAT. and transfer tax is applicable to the other transactions. Transactions performed by persons or entities which are not liable to VAT are, as a A major real estate VAT reform entered into matter of principle, VAT exempt. These force on March 10th, 2010. VAT on real estate transactions are thus subject to transfer tax properties is now ruled by the standard VAT at the standard rate of 5.09006% or principles but some transactions remain 5.80665% depending on the location of the VAT-exempt and subject to VAT election. In building. (Please note that all departments general, the liable person for the VAT is the of the Ile-de-France areas have voted the seller. increase of the standard rate up to 5.80665% including Paris as from 1st January 2016). This new regime lays on the main distinction between transactions on real estate assets Concerning transactions performed by performed by persons or entities liable to persons or entities which are liable to VAT, VAT and transactions on real estate assets the following distinctions must be made:

34 In case of the acquisition In case of VEFA: of land to be built on ("terrain à bâtir"): • VAT at 20% to be paid on the purchase price • VAT at 20% on the purchase price. if VAT has been deducted by the Seller upon • Publicity tax at 0.71498% its acquisition or on the margin. • Transfer tax at 5.09006% or 5.80665% In case of acquisition of a new building depending on the location of the building (i.e. completed since less than 5 years): (standard rate increased in Paris as from • VAT at 20% on the purchase price. 1st January 2016) if VAT on the margin or • Publicity tax at 0.71498% publicity tax at 0.71498% if VAT on full price is payable. However, no transfer tax is In case of acquisition of a building more payable, provided that the purchaser takes than five years old: and respects the commitment to complete • VAT-exempt but possibility of electing for the building works within four years as the application of the VAT at 20% to be paid from the acquisition or publicity tax at on the purchase price if VAT has been 0.71498% if the purchaser takes the deducted by the Seller upon its acquisition commitment to resell it within five years. or on the margin. • Transfer tax at 5.09006% or 5.80665% In case of acquisition of a land which can depending on the location of the building, not be qualified as land to be built: or publicity tax at 0.71498% provided that • VAT-exempt but possibility of electing for the purchaser takes and respects the the application of the VAT at 20% (by the commitment to resell it within five years. seller). • Additional tax to transfer tax or property • Transfer tax at 5.09006% or 5.80665% tax at the rate of 0.6% if the building depending on the location of the building. constitutes offices, commercial or storage However, no transfer tax is payable, premises located in the Ile-de-France area provided that the purchaser takes and (global rates increased to 6.40665% or respects the commitment to complete the 1.31498%). building works within four years as from the acquisition, or publicity tax at 0.71498% VAT neutral regime: if the purchaser takes the commitment to In certain circumstances (notably purchaser resell it within five years or no transfer tax and seller are long term real estate (only a fixed duty of EUR 125) provided that investors, are subject to VAT and have duly the purchaser takes and respects the elected to submit rental income relating to commitment to complete the building commercial/office buildings to VAT), the sale works within four years as from the of a property can be disregarded from a VAT acquisition. standpoint and VAT neutral regime may apply.

35 TAX CLINIC

CIT applicable in France. In 2017 the new rate

INVESTOR TOOLKIT INVESTOR 2 TAX ON RENTAL INCOME of 28% would be only applicable to companies that qualified as French "petites et moyennes Non-resident individuals: entreprises" (PME) and would be applicable Non-resident individuals may invest in France only up to €75,000 of taxable profit. either by directly purchasing the real estate asset, or by purchasing the shares of a French company which holds the real estate asset. 3 VAT ON RENTS Individuals receiving rental income from French real estate are subject to French income tax at As a general rule, the lease of unfurnished the progressive rate, up to 45%. It should be buildings (without equipment) allocated noted that non-resident individuals owning real to professional activities (e.g. offices) is estate assets, directly or through a company, in exempted from VAT. The lease of residential France, which are not rented out may be liable buildings is never subject to VAT. to income tax on a basis corresponding to three However, pursuant to article 260, 2 of the times the rental value of the building, save that French Tax Code ("FTC"), where properties the individual is a resident of a country with are leased for professional purposes, the which France has concluded a tax treaty landlord can voluntary elect for VAT on its (section 164 C of the FTC). Non-resident rental income, notably in order to be in individuals may also be liable to social position to deduct VAT on expenses attached contributions (CSG-CRDS) at the rate of 15.5% to the building rented (or to be rented) (e.g. on rental income and capital gains. VAT upon acquisition, VAT upon works…).

When the real estate asset is held through a corporation, the individual shareholder will be subject to a withholding tax (standard rate of 4 EXIT TAXES 30% which may be reduced by most of double tax treaties) on the dividends received from Subject to double tax treaties provisions, gains the company. realized by a non-resident (individual or company) upon the sale of a French real estate Non-resident companies: asset are subject to capital gain tax in France. Rental incomes deriving from French properties and received by a foreign corporate The Real Estate asset is sold by a foreign shareholder are subject to Corporate Income individual: Tax, in France, at the rate of 34.43% (33 1/3% Capital gains realized on an occasional basis, + surcharge). Please note that the finance bill is subject to a French withholding tax at the for FY 2017 has introduced a progressive standard rate of 19% irrespective of the reform regarding the decrease of the rate of place of residency of the seller: EU or not EU

36 individual resident (except if the individual is a resident of a non-cooperative country). In case of usual basis sales, the rate remains KEY LEGAL AND TECHNICAL at 33%. TERMS AUTHORS The Real Estate asset is sold by a EU (+Iceland, Norway and Lichtenstein) resident company: Capital gains generated as from March 1st, 2010 are calculated in the same way as capital gains generated by French corporate taxpayers, i.e. based on the difference Hervé Jégou between the disposal proceeds and the Local Partner - Baker McKenzie SCP deemed net book value of the building at the time of the disposal.

The capital gains is taxed at the rate of 33 1/3% (specific rate if location in a non- cooperative country). Marc Mariani Partner - Baker McKenzie SCP 5 REAL ESTATE TAXES There are two main annual local property taxes in France. The first one is a residence tax (taxe d’habitation) which must be paid by the occupiers, as at January 1st of the year, of the building. Pierre-Marie Ouchet The second one is the land tax (taxe foncière), Local Partner - Baker McKenzie SCP which must be paid by the owner of the building. This tax is due for the year by the owner of the property as at January 1st of the said year even if the property is sold during the year. TAX CLINIC’S AUTHOR Both taxes are paid by residents and non- residents.

6 OTHER TAXES Virginie Louvigné There are few other taxes to be taken into Local Partner - Baker McKenzie SCP account when investing in French real estate, in particular the wealth tax and the 3% annual tax.

37 THE GREATER PARIS PROJECT

FUTURE PARIS AND "INVENTING THE GREATER PARIS METROPOLIS" "INVENTONS LA METROPOLE DU GRAND PARIS"

Launched at the beginning of the 2010s, the and builders…) with many opportunities on Greater Paris project aims to create a numerous strategic sites that are open for metropolis and to develop a sustainable consultation. urban, social and economic model that is more attractive, competitive and connected. For the 59 sites concerned, 420 candidacies were submitted (by January 2017). The To start an investment momentum on its winners will be revealed in the summer of territory, the metropolis decided to launch a 2017. The projects will be selected on their call for projects “Inventing the Greater Paris innovative character in terms of economic Metropolis”. This initiative provides all real development or social integration. estate professionals (architects, developers

38 THE GRAND PARIS EXPRESS AND RELATED URBAN PROJECTS

The Greater Paris metropolis has outlined a With the new lines coming into service major transport project to compensate for between 2018 and 2030, developers have the current centralised transport system in already anticipated real estate projects which all subway lines converge towards the linked to the future transport infrastructure, centre of Paris. This new network will quickly in particular in the neighbourhoods with serve all the territory’s new hubs. Grand Paris Express stations. While some projects are based on the opportunities This project will make the Greater Paris an offered by this new subway, others will just accessible territory and offer new urban be accelerated by it. development opportunities.

Légende Projects linked to the GPE Projets en lien avec le GPE ProjectsProjets accelerated initiés par by le the GPE GPE Projets accélérés par le GPE

39 THE GREATER PARIS PROJECT

FUTURE PARIS AND "INVENTING THE GREATER PARIS METROPOLIS" CLUSTERS OF THE GREATER PARIS

The Greater Paris metropolis is organised and companies, thus encouraging continuous around seven clusters specialised in various innovation in the health, sustainability city, economic sectors. Each cluster groups on its aerospace and advanced technology territory universities, research laboratories sectors…

Saint-Denis Pleyel Creative cluster 3D imaging, Cinema (Europacorp studios, Euromédia) and Arts and Entertainment sectors. CDG, Villepinte La Défense, Nanterre la Folie Education: Condorcet campus International airport Financial cluster and events Companies in the banking, CDG Airport: 65 million insurance and economic passengers annually management sectors Villepinte Parc des Expos: 160,000 jobs, 1,500 head 250,000 m2 of exhibition offices among which 15 of the space 50 largest global companies 3.2 million m² of office space St-Denis

La Le Bourget Nanterre la Folie Business airport and Paris-Saclay aerospace industries: Applied research and EADS and Airbus technology industries Advanced education institutes: HEC, Polytechnique, CEA, Centrale-Supélec… C ompanies in advanced Descartes, Noisy industries: EDF research Sustainability city cluster centre, Areva, NTIC (Alcatel Higher education (Ecole des Lucent)… Ponts et Chaussées, Ecole d’Urbanisme de Paris) Research labs: (IFSTTAR) and companies

Large Health Campus Villejuif: Canceropole (Oncology centre) with IGR research labs and engineering universities (8,000 researchers) Evry: Genopole with research labs in the biotechnology sector

40 "INVENTONS LA METROPOLE DU GRAND PARIS - SAMPLE OF SITES" Saint-Denis Pleyel Porte de Saint-Ouen Saint-Denis Paris – 17th district

The proposed site stretches for almost The “Porte de Saint-Ouen” site is part of the 4 hectares. It is located along the Northern Innovation Arc, an urban and social Europe rail lines, which at other points laboratory for innovation. The approach to borders the Saint-Denis Pleyel Greater Paris handling a gateway between Paris and its Express station. This site, positioned at one suburbs is a major issue for the Metropolitan of the entrances to the densely populated Area. This Parisian property of over 4,300m² metropolitan area, benefits from exceptional (firm tranche and optional tranche) is a key visibility from the rail lines and the A 86 site in Paris’ green belt. The development motorway overlooking it. In addition, it is at projects underway in the surrounding gates the heart of the area in the running for and muncipalities represent promises of hosting the 2024 Olympic Games. Beginning renewed attractiveness for this interface in 2023, it will become a major hub on the territory, which will have the mission of metropolitan level, due to the Saint-Denis offering solutions for new urban uses. Pleyel train station. This station is a unique junction point for connections between the GPE lines 14, 15, 16 and 17, the Parisian Metro line 13 and lines D and H of the Transilien network.

La Défense transport hub

41 BNP PARIBAS REAL ESTATE TRANSACTION

OUR INVESTMENT TEAMS TEAMS OUR INVESTMENT OUR INVESTMENT TEAMS

Our investment transaction teams deal with investors of all types (investment managers, funds, insurance companies, private clients, developers…) and all nationalities. We accompany our clients for their acquisition and disposal strategies, through on and off market operations, for single assets, portfolios, or sale and lease backs.

In France during 2016, we have affirmed our Our comprehensive market knowledge of both leading position in the market with €19 bn of leasing and investment markets in France, our investment volume transacted in commercial real dynamic analysis of all actors of the real estate estate: offices, retail, industrial/logistics, hotels. market, coupled with the strength of our research teams, allow us to provide you the best guidance and adapted advisory services.

We provide our investor clients with day-to-day assistance for the implementation of their acquisition and management strategy, at an international level. With France-based specialists of international investment, and local offices to cover Asian, Gulf and American investors, our international client benefit from our expertise in the European real estate markets and our unique business model.

42 BNP PARIBAS REAL ESTATE INvESTmENT IN PARIS Our Investment Department

Our French Investment Team deals with Investors (Investment Funds, Insurances / Pension Funds, Property Developers, Private Investors…) within the framework of advisory missions for asset transfer or acquisition (single assets, portfolios, company sales, sale & lease back…) BNP PARIBAS REAL ESTATE INvESTmENT IN PARIS Our Investment Department During 2010, we have strengthened our Our consultants will make you profit from our Our French Investment Team deals with Investors (Investment Funds, Insurances / Pension leading position and consolidated our market deep knowledge of the French real estate Funds, Property Developers, Private Investors…) within the framework of advisory missions for shares with nearly €2.6 Bn of transactions, market, dynamic analysis of different actors, asset transfer or acquisition (single assets, portfolios, company sales, sale & lease back…) consisting of all types of products (ie. 196 including their investment criteria and their assets: offices, retail, industrial, warehouses/ acquisition or arbitrage policy, allows us to offer logistics, sites, hotels). you a personalized view whatever your strategy.

During 2010, we have strengthened our Our consultants will make you profit from our leading position and consolidated our market deep knowledge of the French real estate sharesThe BNP with Paribas nearly Real €2.6 Estate Bn organisationof transactions, and itsmarket, international dynamic coverage analysis (30 countriesof different worldwide) actors, consistingallow us to of reach all typeslarge internationalof products (ie.markets. 196 including their investment criteria and their assets: offices, retail, industrial, warehouses/ acquisition or arbitrage policy, allows us to offer logistics, sites, hotels). you a personalized view whatever your strategy.

cONTAcTSContacts The BNP Paribas Real Estate organisation and its international coverage (30 countries worldwide) HEAD OF INTERNATIONAL INVESTMENT allow us to reach large international markets. CEO ADVISORY FRANCE GROUP (IIG) Laurent Boucher EtienneInternational Prongué Investment +33 (0)1Investment 47 59 25 92 France +33etienne (0)1 47 59PrOngue 21 85 [email protected] AmbrOSIAlI [email protected]+33(0)1 47 59 21 85 +33(0)1 47 59 17 49 [email protected] [email protected] OF CAPITAL MARKETS Olivier Ambrosiali cONTAcTS +33 (0)1 47 59 17 49 International Investment [email protected] Solutions CAPITAL André MARKETS SPher guillaume DelAttre INTERNATIONAL+33(0)1 47 INVESTORS 59 20 44 - FRANCE LOGISTICS +33(0)1 55 CAPITAL 65 24 31 MARKETS [email protected] [email protected] International Investment FranckInvestment Poizat France Larryetienne Young PrOngue +33 Olivier(0)1 47 59 AmbrOSIAlI 17 34 [email protected] +33+33(0)1International (0)1 47 4759 2059 1121 85 Investment +33(0)1International 47 59 17 49 Research [email protected]@bnpparibas.com [email protected] Arnaud SOurnIA RETAIL Christophe CAPITAL PIneAu MARKETS +33(0)1 47 59 17 91 Bruno+33(0)1 Ancelin 47 59 24 77 [email protected] [email protected] AndréInternational Spehr Investment +33 Client(0)1 47 59 23Solutions 91 +33André (0)1 47SPher 59 20 44 [email protected] DelAttre [email protected]+33(0)1 47 59 20 44 +33(0)1 55 65 24 31 [email protected] HOTELS [email protected] CAPITAL MARKETS Bruno Juin +33 (0)1 47 59 20 05 RoryInternational Sheard Investment International Research +33 (0)1 47 59 17 91 [email protected] Arnaud SOurnIA Christophe PIneAu [email protected] +33(0)1 47 59 17 91 RESEARCH +33(0)1 47 59 24 77 [email protected] [email protected] www.realestate.bnpparibas.fr Guillaume Poma +33 (0)1 47 59 20 72 Richard Malle [email protected] +33 (0)1 47 59 17 37 [email protected]

www.realestate.bnpparibas.fr

43 IN A CHANGING WORLD, TOMORROW’S REAL ESTATE IS BUILT TODAY.

BNP Paribas Real Estate: 167 Quai de la Bataille de Stalingrad, 92867 Issy-les-Moulineaux Cedex. Tel. + 33(0)1 55 65 20 50 - SAS with a capital of €383.071.696 - 692 012 180 RCS Nanterre - SIRET 692 012 180 00174 - Code NAF 7010 Z 6 REAL ESTATE BUSINESS LINES FOR YOUR PROJECTS realestate.bnpparibas.com

Real Estate for a changing world