Carrefour, the French supermarket chain and the world’s second-biggest retailer, said Thursday that it planned to sell part of its real estate portfolio in an initial public offering, bowing to pressure from investors including the French billionaire Bernard Arnault.
The company will sell a 20 percent stake in its Carrefour property unit next year. The unit owns 280 superstores and 540 smaller supermarkets in Europe — 60 percent of Carrefour’s real estate.
More than five months ago, Mr. Arnault, the richest man in France and chairman of the fashion house Christian Dior, teamed up with Colony Capital, an American real estate investment firm, to acquire almost 10 percent of Carrefour, with an eye toward its real estate, valued at 24 billion euros (nearly $33 billion).
Carrefour, which is surpassed among retailers only by Wal-Mart, said Thursday that it expected the sale to raise about 3 billion euros ($4.1 billion). Combined with proceeds from divestments of stores in Portugal, Switzerland and other countries, it will help Carrefour buy back as much as 4.5 billion euros’ ($6.13 billion) worth of its own stock.
“It creates value for shareholders and it makes sense,” said Alexandre Iatrides, an analyst at Richelieu Finance in Paris. “Carrefour at the beginning didn’t like it, but more and more distribution companies are selling their real estate.”
Share prices of retailers have risen this year, even though some reported slower profit growth than analysts estimated, as investors realized that the value of the companies’ real estate was not reflected in their share prices and they expected the companies to sell their property, lease it back and pass some of the proceeds back to them.
There have been many precedents for such real estate sales, and the maneuvering has helped free cash that companies can use to buy back stock or finance expansion. Tesco, Britain’s biggest food retailer, raised some $1.1 billion in March by selling a 50 percent stake in 21 stores to British Land, a real estate investment trust. Casino Guichard-Perrachon, a French retailer, sold shares in its Mercialys real estate unit two years ago.
Shares in the British grocery chain J Sainsbury jumped this year after it received takeover offers from private equity firms interested in its $17 billion of real estate.
But the maneuvering is not without risks. “Carrefour needs to carefully choose the real estate it wants to sell, where profitability is big enough,” Mr. Iatrides said, then added, “If you pay rent, you have less control over the costs and if the price war continues, the margins may get squeezed.”
In addition, a retailer usually has limited ability to expand or change the look of a property it does not own.
Carrefour’s chief executive, José Luis Duran, said Thursday that the company would keep an 80 percent stake in the property unit to “retain control over our operational costs and make sure that we can stick to our policy of low prices.”