Live from Mipim (Cannes) - Hermitage Plaza, the massive project to build two mixed-use towers on the bank of the Seine in Paris La Défense, will be completed for the 2024 Olympic Games, says its sponsor, Russian businessman Emin Iskenderov. He is in talks to pre-sell one tower for €1.5bn.
Ten years after starting the project, repeatedly delayed after several false start announcements and which many French real estate professionals said would never be built, Iskenderov told a news conference at MIPIM in Cannes on Tuesday that the last legal obstacles have been cleared. These mainly concerned the rights to evict the last of the 250 families that occupied apartments on the site on the east side of La Défense.
The Court of Appeal of Versailles on 7 December granted a deadline to regularise the building licenses in dispute, and final judgments have been made that will allow the Hermitage group to proceed with evictions, he said. The legal moves mean that the controversial €2.5bn project, for which Hermitage has contracted the powerful Bouygues building group, can move ahead.
The parameters of the project financing have however shifted since Iskenderov about five years ago announced the support of major international banks, including Germany's Deutsche Bank. Not only has Hermitage resumed its equity investment at the start of the year, mobilising €233m, but the bank debt financing has been re-negotiated. "Previously, we were looking to partner with a large international group and looking for financing from foreign banks," he said. Today, two major French banks are ready to support the majority of the debt of €1.2bn to €1.5bn.
But, in a radical change of plan, he also said Hermitage is in advanced negotiations with an unnamed European fund to sell one of the towers, which will include 37,000 sqm of office space. "The operation would provide a deposit of €180m," he said. The transaction, if it goes ahead, should ultimately be signed at €1.5bn.
At the same time, pre-marketing of the hotels and offices components of the vast 280,000 sqm project is progressing. Hermitage is in talks with a large hotel group to enter a lease agreement on the five-star luxury hotel planned in the complex. "We hope to sign the agreement by the summer," he said. "Today, we are asking for a €20m contract and the group we are talking to is proposing €15m," Iskenderov said. The operator is not yet present in Europe and thus plans to open its first flagship in Paris. He added that discussions are also under way for the lease of 37,000 sqm of office, specifically with a US company looking to set up its European headquarters. "We are now targeting a delivery of the Hermitage Plaza Towers for the 2024 Olympic Games," he said.