Bell Campus Sale to Korean Consortium an Investment Coup

 Bell campus sale to Korean consortium an investment coup

The Oct. 6 sale of the Bell campus on Nun’s Island in the Montreal suburb of Verdun to a South Korean investment consortium is a landmark deal in more ways than one. 
“This is the first Canadian deal any of them have ever seen,” notes James Papadimitriou, a partner in the Montreal office of law firm McCarthy Tetrault who specializes in real estate. 
McCarthy Tetrault worked on behalf of the six-investor, Korean consortium led by Hanwha und Kyobo Life Insurance to secure $300 million in financing from National Bank for the Canadian portion of the global deal. 
The sale of the 840 000-square-foot, five-office building campus style Montreal headquarters of Canada’s largest telecommunications company is part of a US$1-billion, three property deal spanning three countries. The other two properties are the central-Paris global headquarters of pharmaceutical giant Sanofi-Aventis; and a class A address in east Washington, D.C., occupied by the U.S. Department of Justice. 
The Korean group purchased the properties from KanAm Grundinvest Fonds of Frankfurt, Germany. The sale is part of a strategy by KanAm Grund Kapitalanlagegesell mbH to liquidate the fund by 2016.  KanAm acquired the Bell campus in 2010 from The Canderel Group.
In the global deal, what makes the Bell campus acquisition a coup is that it’s almost impossible for foreign investors to enter the market here. 
“Canada is quite unique in that it’s controlled by institutional investors. They (the Korean investors) truly did not believe that the Canadian REIT’s & pension funds controlled that much of Canadian real estate,” says Brian Ker, vice-president at CBRE and co-head of CBRE’s national investment team. “They wanted quadruple proof.”
CBRE played a “backseat role” in the global deal, explains Ker, helping primarily to sell the Korean investors on the Bell campus. It is considered a unique jewel.  The LEED-certified campus of five low-rise buildings includes a 900-seat cafeteria, banking and daycare facilities, 2,000 underground parking spaces and private courtyard green space.
“I did a lot of handholding,” says Ker. “My biggest role was getting the individual investors comfortable with Montreal, because Montreal isn’t a gateway city. It’s not a Paris or a Washington. I had to get them to understand who Bell is, and how difficult it is to break into this market. Ultimately my job was to be the salesperson of Montreal.” 
The purchase took eight months to complete. Many of the Korean investors did not actually visit Canada to see the Montreal property before the deal closed. 
Papadimitriou says the portfolio deal was “quite challenging because there are three countries, three markets and three systems” to negotiate as well as cultural differences in the way business is done. 
“You don’t really know if they’re going to do the deal or not,” he says. Papadimitriou points out that at any time, any one of the six individual investors could have shot down the deal. It’s a question of aligning all the right elements. 
The success of this transaction is, in part, the work of Nektar Diamantopoulos,  Vice President Debt and Structured Finance at CBRE’s Montreal office, who was instrumental in the $300M financing of the Canadian property. The financing is structured with senior & junior notes. The other key player in this mastermind transaction, Jin Choi, Head of Asian Operations for Genii Capital, a Luxembourg-based boutique private equity investment firm involved in the billion-dollar global purchase. His cross-cultural skills made it all possible: “This was a big challenge. But it’s a great deal and I’m glad we did it. It’s a great market, and a great investor. It was quite possibly the toughest deal I’ve done but it was really enjoyable,” Choi adds.
This great team effort came through in a big way for Montreal!

on December 17, 2014