Kering's strategy in real estate is evolving
The luxury mega-group and private equity fund Ardian have entered into a multimillion-dollar partnership
January 16th, 2025
For several months, it has become clear that the luxury mega-group Kering is implementing a long-term diversification strategy centered on real estate. The owner of Gucci and Balenciaga is increasingly investing in prestigious properties, aiming to create a new company that would ease the financial burden on its core business while enhancing the value of highly prestigious assets. This strategy has taken a more defined shape with the announcement of a new partnership between Kering and Ardian, a prominent private equity firm. The two companies have signed a binding agreement to create a joint venture focused on the management and enhancement of high-value real estate in the heart of Paris—an operation valued at 837 million euros, involving the transfer of three of Kering's most iconic properties to the new entity. Ardian will acquire a majority stake of 60%, while Kering will retain a 40% stake. The deal is expected to be finalized by the first quarter of 2025, underscoring Kering's commitment to securing liquidity and consolidating its presence in key locations within the fashion capital. One of the properties involved is the Hôtel de Nocé, located on the north side of Place Vendôme, currently home to Boucheron and Qeelin, Kering’s high-jewelry brands. Meanwhile, across the square, Kering is renovating another historic building to transform it into a Gucci flagship store. Completing the portfolio are two other prestigious properties located on Avenue Montaigne, one of the boulevards renowned for housing some of the most iconic haute couture maisons in history.
The agreement between Kering and Ardian offers multiple advantages for the French luxury group. First, the operation guarantees Kering a liquidity injection of 837 million euros, allowing it to address current economic challenges, support its growth plans, and prepare for future strategic operations, such as the acquisition of the remaining 70% of Valentino (whose haute couture ateliers are located in Place Vendôme) scheduled for 2025 at a cost of 4 billion euros. To prepare for such a significant acquisition, Kering may pursue additional real estate operations to further strengthen its cash reserves. The deal with Ardian has already set a precedent for leveraging real estate assets to gain financial flexibility, signaling a potential shift in the group's broader strategy. This capital influx is crucial for balancing recent declines in financial results due to the global luxury market crisis. However, it is important to note that this partial sale does not result in a loss of control over the properties. The 40% stake retained by Kering in the new joint venture represents a safeguard to ensure continued use of the properties involved in the agreement to strengthen the visibility and positioning of its brands. This approach allows the group to free up financial resources to reinvest in bolstering existing brands and potentially expanding its portfolio through new acquisitions. Collaborating with Ardian, one of the leading players in real estate investments, also reduces risks associated with the direct management of properties—not to mention how the private equity fund brings expertise and skills to optimize the value and performance of the assets, while ensuring that these locations continue to uphold the prestige of Kering's brands.
The operation also represents an opportunity to improve the company's balance sheet, making Kering financially more stable and attractive to investors. By strengthening the ratio of debt to equity, the group places itself in a solid position to attract new capital and balance its accounts, while paving the way for further real estate transactions to continue accumulating liquidity—especially in view of next month when the group is set to present its new financial results report. The partnership with Ardian comes at a crucial time for Kering, which in recent months has faced several cash flow issues. With operating profit expected to drop by 50% for the current fiscal year, Kering has indicated its intention to reassess its priorities. François-Henri Pinault, Kering’s chairman and CEO, has emphasized the company’s commitment to rigorous financial management and sustainable growth: “Our absolute priority is to create the conditions for a return to solid and sustainable growth, while maintaining even tighter control over costs and greater selectivity in investments.” This is why the group sought to achieve crucial liquidity with this agreement without compromising its presence in the ecosystem of Parisian luxury retail.