Unibail SA History

Company Perspectives:

Unibail's strategy involves building up a leading position in three major segments of the commercial property market: offices, shopping centers, and exhibition and convention complexes. Combining expertise and overall size, which is underpinned by its dominant position in each of its sectors, Unibail has managed to reach critical mass in all its segments, as well as on the financial markets, where it benefits from a large market capitalisation and the resulting stock's liquidity. Key Dates:

Key Dates:

1968:

Worms et Cie forms Union du Credit-Bail Immobilier (Unibail).

1972:

Unibail lists on Paris bourse spot market.

1976:

Company acquires first real estate property.

1986:

Unibail lists on Paris main board.

1991:

Unibail abandons lease financing and becomes a real estate holding company.

1992:

Company acquires 23 percent of Les Quatre Temps.

1994:

Company acquires Compagnie Foncière Internationale (CFI) portfolio held by the Suez Group for FFr 3 billion.

1995:

Arc Union is taken over; company acquires Espace Expansion.

1998:

Company acquires Frankoparis.

1999:

Company acquires Vivendi's FFr 6 billion real estate portfolio; acquires Crossroads Property Investors' assets.

2000:

Unibail acquires 93 percent of Paris Expo; CNIT merges into Unibail.

2001:

Unibail acquires Nice-Etoile shopping center.

Company History:

Unibail SA is France's leading commercial property management company, with a portfolio of office buildings, shopping centers, and convention and exhibition centers valued at EUR 6.4 billion. These sectors make up the three core areas of the company's operations. Office buildings represent the largest part of the company's portfolio, with more than 50 buildings located throughout the Parisian business district valued at nearly EUR 4 billion. The company's office building holdings include such prime Parisian real estate and locations as La Defense, Europe's largest business district, where Unibail's 310,000 square meters of office space make it that center's largest real estate owner. The company's acquisition of the majority share of CNIT SA in 2000 further boosts its presence in La Defense, and also gives it a strong boost into the convention and exhibition centers market. Unibail entered that market in the late 1990s with the acquisition of such important properties as the Paris Expo; the company's holdings in the convention and exhibition centers sector already represent a value of EUR 700 million. The third wing of Unibail's holdings is its extensive array of shopping center complexes, chiefly located around Paris but extending across all of France, with a total value of some EUR 1.9 billion. The company's shopping centers include Les Halles in Paris, the country's busiest shopping mall. Unibail is quoted on the Paris stock exchange and is led by Chairman and CEO Leon Bressler.

From Leasing Finance to Lease Holder in the 1970s

Unibail was founded as Union du Credit-Bail Immobilier as the real estate leasing division of famed French financial house Worms et Cie in 1968. Formed in 1848 by Hypolite Worms, that company had started business as a coal importer, before it diversified into merchant shipping and then to shipbuilding during World War I. From there Worms grew into one of France's foremost industrial and financial houses, now under the leadership of Hypolite Worms's grandson, also named Hypolite Worms. In the 1920s, the company expanded into banking services, as well as capital investment activities, including financing the launch of France's national airline, Air France. The company's shipbuilding operations led it to enter the long-haul shipping industry, with the creation of Nouvelle Compagnie Havraise P&eacute--insulaire in 1934.

Following World War II, Worms et Cie branched out into insurance, while also boosting its financial activities, such as construction financing. The company wound down its industrial operations in the 1950s, as its interests turned more and more to banking and financial services. In the mid- and late 1960s, the company shut down its shipbuilding arm and closed its shipping business as well. Taking their place was the Banque de Worms, created in 1965. The company now extended into a new area of business, that of real estate leasing, in 1968, with the creation of a new subsidiary, Union du Credit-Bail Immobilier, known simply as Unibail.

Unibail soon became an independent operation as Worms et Cie turned its concentration more fully on its core banking and insurance operations. Unibail was first introduced to the Paris bourse in 1972, when its shares were on that stock market's spot market. Unibail remained dedicated to its finance leasing operations through the late 1980s. However, the company had already begun to collect its own real estate holdings, beginning with the purchase of 5, rue Royale, in Paris's eighth arrondissement, in 1976.

Unibail moved to a full listing on the Paris main board in 1986, and then began to plan a new era of growth. Shortly thereafter, the company began acquiring other finance leasing firms, including Sliminco, purchased from Credit Lyonnais in 1988, and Pretabail Sicommerce, acquired in 1990. Yet the company, now led by Leon Bressler (who became chairman in 1992) was beginning to plot its transformation for the new decade. In 1987 the company began turning over management of its real estate portfolio to Arc Union.

In 1990 the company backed Arc Union's formation of a new subsidiary, Price, a property company focused on shopping center properties. By the following year, Unibail had decided to abandon lease financing to concentrate its future growth on building a portfolio as a real estate holding company. In 1992, the company disposed of a portion of its lease portfolio, earning FFr 2.2 billion on the sale. In turn the company made its first major real estate purchase, that of a 23 percent stake in the Les Quatre Temps shopping center complex situated in the La Defense business district in Paris.

Unibail's timing might have seemed awkward to observers--the French real estate market was in the midst of a long slump, begun in the late 1980s, that was not to hit bottom until 1995, while the shopping center industry remained crippled by the low consumer spending of the recessionary early 1990s. Unibail, however, remained dedicated to its new strategy, and began building up a new portfolio of property holdings. The company was helped in this quest by the changing French real estate market itself. Until the 1980s, most French property had been held by the country's large banking and other financial institutions, which mostly owned real estate for the tax incentives such holdings offered. At the same time, commercial real estate was largely owned by individual companies. A new breed of real estate investors moved into the market in the 1980s, particularly pension funds and the like. Yet the new property owners, who saw their investments dwindle during the real estate slump late in the decade, began exiting the market in the early 1990s. The recession and real estate slump combined to present banks with large numbers of repossessed properties. Under pressure, the banks were eager to sell off these underperforming properties.

Real Estate Titan for the 21st Century

As an independent real estate company, Unibail was able to focus on its long-term development, building up a portfolio of holdings that was to place it among the industry's leaders by the end of the decade. The company stepped up its purchases of real estate, starting with the acquisition/absorption of Price in 1993 and the purchase of the CFI (Compagnie Foncière Internationale) portfolio held by the Suez Group, for FFr 3 billion, completed in 1994. The following year, Unibail took over Arc Union, giving the latter company full active management of Unibail's growing real estate portfolio. In that year, the company also acquired Espace Expansion, one of France's leading developers and managers of shopping centers. At that time, Unibail reorganized its holdings into two main lines, those of office properties and shopping centers.

The company boosted its shopping center portfolio with two important acquisitions at mid-decade. The first raised its share of the Quatre Temps shopping complex to a majority share of 53.3 percent. The company also stepped up its holding in the Forum des Halles shopping center--France's busiest--from 17 percent to a majority control of 64 percent. In 1996, the company shed the Italian wing of its Espace Expansion acquisition, focusing its holdings on the French market. The company acquired two important office buildings that year, the Quai Ouest, in Boulogne sur Seine, with 14,000 square meters of office space, and Le France, in Neuilly, with 27,000 square meters of offices. These properties, located in the so-called Golden Crescent outside of Paris, helped the company expand beyond the Paris city center and attract a strong number of major French and international corporations as clients.

In 1996, also, Unibail took part in the formation of Crossroads Property Investors, a Luxembourg-based partnership created with American and Asian investors. With investment capital of more than FFr 5 billion, Crossroads was to become an important part in building Unibail's market-leading position at decade's end. In 1997, Crossroads began making significant acquisitions in the Parisian market, including a selection of buildings located in the city's 16th and 17th arrondissements that added nearly 50,000 square meters to the Crossroads portfolio.

Meanwhile, Unibail continued making investments under its own name as well. In 1998, the company made a share exchange offer to acquire Frankoparis, the property company that owned the Hotel Meridien located in the Montparnasse business district of Paris. The following year, Unibail hit the big time when it agreed to acquire the FFr 6 billion property portfolio from Vivendi Group, then exiting a real estate strategy begun earlier in the decade. This acquisition not only strengthened the company's park of office buildings--it added some 300,000 square meters of office space, including a share of the Carrousel du Louvre and the CNIT convention center at La Defense--but also gave Unibail the leading share of space in the Paris-La Defense district. With a property portfolio now valued at more than FFr 20 billion (more than EUR 6 billion), Unibail had achieved sufficient size to place it among the top competitors for the European property market.

Later in 1999, Unibail cemented its leadership position with the acquisition of Crossroads Property's portfolio, by then valued at FFr 4.7 billion. At the same time, Unibail moved to extend its operations into a new area of business, that of convention and exhibition centers. As the century drew to a close, opportunities to buy new office building space were shrinking--demand for space in the Parisian market far exceeded supply--and Unibail's own developments of new building space, including new buildings in La Defense and elsewhere in Paris, were among the last available sites within Paris. The bustling French and European economy, meanwhile, had created a boom in the convention and exhibition market.

Unibail made two significant purchases to give it a strong position in its new core focus area. The first came at the end of 1999, when it made an offer to take over the operation of the Paris Expo. By early 2000, the company had beat out its competitors to take majority control of the Paris Expo and, by October 2000, the company's holding in that site had been raised to 93 percent. In May 2000, the company merged its CNIT holdings into its main portfolio, cementing its position as one of France's leading convention and exhibition center property groups. In January 2001, the company reached an agreement to take over the Nice-Etoile shopping center, adding another 100,000 square meters to its portfolio of retail space.

By early 2001, Unibail's strategy had enabled it to claim France's leading real estate position in its chosen sectors, as well as rising revenues: its 2000 rent levels of EUR 357 represented a 74 percent increase over the previous year. At the same time, the company's strong tenant list of major French and International corporations gave it lease contracts providing it with guaranteed rent levels through the end of the new century's first decade.

Principal Subsidiaries: Omnifinance SA; Uni-Bureaux SAS; Paris expo SA; Tanagra SAS; Doria SAS; Uni-commerces SAS.

Further Reading:

• Bériot, Frédéric, "Unibail devrait enregistrer une nouvelle progression à deux chiffres," La Vie Financière, February 5, 2000.
• Besses Boumard, Pascale, "Unibail acquiert l'ex-empire immobilier de Christian Pellerin pour 6 millards de francs," Les Echos, March 12, 1999, p. 25.
• Chevallard, Lucile, "Nous avons une visibilité de dix ans sur nos revenus," Les Echos, July 28, 2000, p. 21.
• Tieman, Ross, "Search for Supply," Financial Times, March 9, 2001.
• "Unibail: très bons resultats," Le Figaro, February 15, 2001.

Source: International Directory of Company Histories, Vol. 40. St. James Press, 2001.

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