Kering SA agreed to sell a majority stake in three luxury Paris properties to French private equity firm Ardian SAS, a deal that will net the struggling owner of the Gucci fashion label €837 million ($861 million).
The landmark properties — Hôtel de Nocé on place Vendôme and two buildings on avenue Montaigne — will be held by a joint venture. Kering will keep 40% and Ardian will own the rest, the companies said.
Kering is grappling with waning demand, particularly in China and looming debt maturities. The company has signaled it would use its real estate assets to help get its finances in order.
The stock rose as much as 9% in early Paris trading, the biggest gain in more than three months, after a sales report by rival Richemont signaled a luxury industry rebound. Kering has shed almost 40% in the past 12 months, lagging rivals like LVMH, Hermes International SCA and even Burberry Group Plc.
“We assume more property proceeds may be forthcoming in the months ahead” considering the €1.5 billion of maturities in the second and third quarter, James Grzinic, an analyst at Jefferies, wrote in a note. Even so, “brand momentum, especially at Gucci, will remain the critical driver for the shares.”
The owner of Yves Saint Laurent and Bottega Veneta warned in October it expects profit for 2024 to reach the lowest level since 2016.
The property deal is expected to close in the first quarter. The transaction brings closely held Ardian “real estate assets located on the most prestigious high streets, offering its clients access to a very exclusive real estate market.”
Kering Chief Financial Officer Armelle Poulou estimated that Kering’s net debt would stand at about €11 billion at the end of last year, excluding any property deals.