by Elisa Anzolin and Mathieu Rosemain

PARIS/MILAN (Reuters)-The French Luxury Group Kering is in exclusive negotiations with the heavyweight of the Ardian investment capital to give it a participation in real estate assets of the famous fifth avenue de New York, according to two sources with direct knowledge of the file.

Kering had bought these locations only a year and a half ago, in January 2024. But the luxury giant, faced with a heavy debt, seeks to reduce its costs and bail out by selling some of its real estate assets.

In addition to its debt, the Pinault family controlled also undergoes the slowdown which strikes a large part of the luxury industry.

Kering and Ardian refused to comment.

The mother house of the Italian brand Gucci had bought commercial spaces last year of approximately 10,700 m² and located at 715-717 of the fifth avenue for 885 million euros.

“With this transaction, Kering acquires exceptional retail locations on one of the most emblematic avenues in the world,” the group announced.

“This investment represents a new step in the selective real estate strategy of Kering, aimed at securing key and highly desirable locations for its houses,” he added.

Kering’s net debt amounted to 10.5 billion euros at the end of 2024, according to its annual report, when it was almost no three years earlier.

In the meantime, Kering has multiplied real estate purchases. In addition to the assets of the fifth avenue, the group, for example, announced the purchase of a very chic building via Monte Napoleone in Milan in April 2024, for 1.3 billion euros.

Deputy Director General, Jean-Marc Duplaix, said at the start of the year that Kering planned to collect at least 2 billion euros over the next two years thanks to real estate transactions.

In January, the group had already signed an agreement with Ardian, by which the fund took a 60% stake in a real estate portfolio held with Kering, which then received a counterpart of 837 million euros while retaining a part of 40%.

This real estate portfolio includes prestigious Parisian buildings, Place Vendôme and Avenue Montaigne.

The current discussions between Kering and Ardian on New York assets also relate to the sale of participation, said the sources attached by Reuters. The latter refused to comment on the value of the possible transaction or the size of the participation under discussion.

In April, Jean-Marc Duplaix told shareholders wanting not to sell these assets, but to give in and have a co-action.

He added that the properties of Via Montenapoleone in Milan and the fifth avenue were affected by negotiations, as well as real estate in Tokyo.

Jean-Marc Duplaix said that maintaining a presence in the main shopping streets was essential for the brands of Kering, which also holds Balenciaga and Saint Laurent.

(Report Elisa Anzolin in Milan and Mathieu Rosemain in Paris, with the contribution of Tassilo Hummel; Florence Lève, edited by Blandine Hénault)

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