(PARIS, FRENCH REPUBLICAN REPUBLICAN REPUBLICAN REPUBL With the completion of a $402.5 million (€272 million) sale and variable leaseback agreement involving 158 hotels totaling 12,300 budget-priced rooms, the Paris-based Accor Group has improved its bottom line. properties qatar
According to industry experts, it is the largest sale of its sort in France in at least five years. The buyer remained anonymous.
Accord closed the acquisition with a group of renowned French institutional investors through an OPCI, or a property investment trust, which is defined as a real estate collective-investment vehicle in France.
The 158 hotels under the F1 brand will continue to be operated by Accor. According to Accor officials, this decision will offer the company complete control over pricing strategy and the product innovation process, both of which are "critical to the brand's long-term viability."
About 100 houses have been restored since the end of 2008 as part of a massive refurbishment initiative that includes the new Duo room design (2 twin beds). The new offer is intended to entice new clients as well as reinforce the brand's core base.
Accor signed a 12-year business lease as part of the deal, which can be renewed six times at Accor's discretion. The variable rentals are based on an average of 20% of income, with no minimum guarantee. The variable rent would have been €21.3 million based on 2008 revenue.
Accor will be able to lower its adjusted net debt by roughly €187 million in 2009 as a result of this transaction, with €130 million added to the Group's cash reserves.
Furthermore, according to Accor authorities, it will have a favorable impact on profit before tax of almost €5 million. In this difficult economic climate, the acquisition demonstrates investors' renewed interest in hotel real estate, particularly in the low-cost market.
Accor, a major global group that operates in nearly 100 countries and employs 150,000 people, is the European leader in hotels as well as the global leader in services to corporate clients and public organizations.
It has over 40 years of experience in two key businesses that it offers to its clients:
Hotels, including Sofitel, Pullman, MGallery, Novotel, Mercure, Suitehotel, Ibis, all seasons, Etap Hotel, Formule 1 and Motel 6, with 4,000 hotels and almost 500,000 rooms in 90 countries, as well as strategically associated operations like Lenôtre.
Accor Services products in employee and constituent benefits, rewards and incentives, and spending management help 32 million individuals in 40 countries.
Accor was the first in France to introduce the low-cost hotel idea, constructing the first Formule 1 hotel in 1984 and using cutting-edge construction and management practices. In 2007, Formule 1 was renamed hotelF1 and became the Accor Group's entry-level hotel brand in France, with an average room rate of roughly €33 ($49 US). (Today, Sept. 22, 2009, one euro equals $1.4792 US in monetary transactions.)