64% Drop In Value Shows Pain Is Still Getting Worse For Some Offices
A Paris office building once valued at €343M (£265M) has been revalued at just €122M (£105M), lenders to the property have been told, and if the tenant vacates, it could be worth just €33M (£28M).
A new valuation for the 672K SF River Quest office campus in the north-west suburbs of Paris shows that the value has fallen by almost two-thirds since a €189M loan for the asset was provided in 2020.
The building is owned by London-based private equity firm LRC. The loan was provided by Goldman Sachs and then securitised.
The securitisation was the first-ever green CMBS, with the property originally receiving a BREEAM Very Good rating and being subject to regular sustainability assessments.
The sole tenant in the building is data and technology company Atos, which occupies 83% of the campus, leaving it 17% vacant.
The company’s lease expires in 2030, and it has been in negotiations with LRC about whether to extend. Atos has struggled financially, undertaking a debt-for-equity swap in 2024 to ease pressure on its balance sheet, and its financial health has impacted the valuation of the property.
When the loan was underwritten in 2020, the vacant possession value of the campus was €204M, but at the most recent valuation, that figure had dropped to just €33M.
The loan, which is in special servicing, was originally scheduled to mature in 2024 but was extended until April 2026 and is now subject to a series of short-term extensions.
It now stands at €174M, with €10M that was held in escrow having been used to pay down interest in April after no lease restructure with Atos was secured.
