French mogul survives slump after deal almost sank him
Alain Taravella recalls how in late 2008, as France’s real-estate market slumped, he began doubting his biggest corporate acquisition. A year earlier, he’d bought apartment and office developer Cogedim from investors led by Italian insurer Vittoria Assicurazioni SpA. He outbid General Electric Co. and billionaires Bernard Arnault and Albert Frere to seal the deal.
Analysts were skeptical of the $921 million purchase; Cogedim didn’t appear to mesh with Taravella’s Altarea SCA, a builder of shopping centers, Bloomberg Markets magazine reports in its September cover package: “Hidden Billionaires.”
Then, as Cogedim’s revenue and profit fell, Taravella wrote off more than half the value of the purchase that December, after rustling up 183 million euros of his own money in a June 2008 rights offering to maintain his 49 percent Altarea stake.
“The end of 2008 wasn’t a happy time,” says Taravella, 63, at his headquarters between Paris’s Opera district and the Avenue des Champs-Elysees. “Four years later, the bet has proved to be the right one.”
Taravella’s restructuring and a sudden recovery in France’s housing market helped prove critics wrong. He shed one of every eight jobs at Cogedim, sold development sites and began building starter homes for low-income earners.
Housing demand rebounded sooner than even Taravella had anticipated, driven by 20-year mortgage rates of about 4 percent and government-subsidized interest-free loans for some first-time buyers. As of the end of 2010, Cogedim’s portion of French home sales had doubled, to 5.3 percent, since the takeover.
Taravella’s 760,000-euro investment to start Altarea in 1994 has repaid him more than 900-fold — boosting his net worth to more than $1.1 billion, based on the value of his holdings and dividends.
Investors are doing well, too. Since Altarea first became publicly traded in late 2004, its shareholders earned annual returns of 25 percent from dividends and stock appreciation.
“We’re very pleased with the operational performance,” says Patrick Kanters, managing director of real estate at Amsterdam-based APG Algemene Pensioen Groep NV, which oversees the assets of the world’s third-largest pension fund.
Taravella was at his best in turning his company around, says board member Christophe Kullmann, head of Metz, France- based office landlord Fonciere des Regions SA, which owns 12 percent of Altarea.
“He is the complete package: a financial expert, a real- estate man, a good manager and, above all, a formidable negotiator,” he says.
Those qualities weren’t as apparent in Taravella’s early years. He grew up in Normandy and won one of the 246 places at Ecole des Hautes Etudes Commerciales de Paris, France’s top business school, in 1968. Five out of six students that year were from Paris and its environs, including former International Monetary Fund chief Dominique Strauss-Kahn.
Coming from the provinces and a reluctant public speaker, Taravella didn’t stand out, classmate Rene Proglio says.
“He had so much talent, but back then, it wasn’t clear that he would be a success,” says Proglio, who now heads Morgan Stanley in France.
Taravella honed his real-estate skills while working with Pierre & Vacances SA Chairman Gerard Bremond. For 19 years, Taravella helped turn the small business that built chalets at a ski resort into a 490 million-euro company as of early August that runs 51,000 holiday homes across Europe.
Still, Taravella wanted more.
“My goal was always to create a company,” he says. Altarea, a name shortened from Alain Taravella Real Estate, plunged into retail properties, an area other companies were abandoning after France froze construction of out-of-town shopping centers to protect small businesses.
Taravella positioned Altarea as a city-center specialist. He opened Bercy Village in 2000, transforming Paris’s former wine-storage district into a cobbled pedestrian precinct with shops and restaurants.
These days, Taravella is building a mall in the Paris suburb of Villeneuve-la-Garenne and developing big-box retail parks in Limoges and Le Mans. At the end of July, Altarea had raised 80 percent of a 600 million-euro fund to develop and refurbish offices, adding to its business overseeing office projects and managing buildings it has sold.
Investors say Taravella delegates responsibilities to the loyal team he has assembled, all of whom hold Altarea shares. His sons, Matthieu, 33, and Gautier, 31, are board members.
“He will organize things so that they don’t all rely on him,” Kullmann says.
Taravella says that he has little time for distractions, other than opera and keeping an eye on olive oil production at his estate in Provence.
“There’s only room for one passion in my life,” he says, referring to Altarea, a few hours before heading to Paris’s Bastille opera house to see Puccini’s Tosca. “Making money is just a consequence and a measure of performance.”