France Telecom Dumps Real Estate

PARIS -- As a result of a competitive auction, France Telecom has entered today into an agreement to sell 457 properties for a total of about euro 510 million to Morgan Stanley International Real Estate Funds and Foncière des Régions. According to the terms of the agreement, France Telecom and the consortium led by Morgan Stanley have committed to complete the transaction progressively in the coming months.The transaction includes properties located throughout France mainly in the provinces with an average surface area of 2,000 sqm. It is composed of approximately one third office buildings and two thirds mixed-use buildings that include offices and the Group's telecommunications equipment. The majority of the properties sold will be leased back by the France Telecom Group on standard 6 or 9-year leases. Assets to be vacated in the short term represent approximately 7% of the surface area of the total portfolio. Financial and legal terms negotiated by France Telecom for this transaction are very similar to those agreed upon for the first real estate divestiture. This second transaction also has similar objectives to those outlined by France Telecom in its real estate divestiture programme:1. Refocus on its core business as a telecommunications services provider.
2. Ongoing rationalization of property operating costs.
3. Reduce debt. The transaction is part of the France Telecom Group's debt reduction programme. It marks the second phase in a plan originally announced in January 2001 to divest real estate assets.France Telecom SA