AccorHotels sells majority holding in real estate arm for $5.4b
French hotel company AccorHotels has signed agreements with a group of international investors to sell a majority stake in its real estate arm, AccorInvest, for €4.4 billion ($5.4 billion).
Under the terms of the agreements, AccorHotels would initially sell 55 percent of AccorInvest to sovereign funds, including the Public Investment Fund (Saudi Arabia), and GIC (Singapore); institutional investors, namely Credit Agricole Assurances, Colony NorthStar, Gulf Investment Corp., and Amundi.
“These agreements represent a key milestone for the group. Following the separation of AccorInvest into a stand-alone legal entity last summer, we are now gathering a roundtable of leading investors, on the basis of a valuation that fully reflects its global leadership and the quality of its assets, while building a long-term relationship between AccorHotels and AccorInvest,” said Sébastien Bazin, chairman and CEO of AccorHotels. “These elements were essential to make this operation a success for all stakeholders: teams, partners, as well as present and future shareholders of both entities. The entry of new shareholders and the deconsolidation of AccorInvest will provide AccorHotels with substantial leeway to enhance our dynamic growth and innovation strategy and create value for shareholders. For its part, AccorInvest will take advantage of its new powerful shareholders’ support, as well as a strengthened financial structure to execute its roadmap and continue to reinforce its portfolio of assets.”
The AccorInvest hotels would be operated by AccorHotels under very-long-term contracts, namely 50 years (including a 15-year renewal option) for luxury and upscale hotels and 30 years on average (including a 10-year renewal option) for hotels in the midscale and economy segments. The management contract terms that have been negotiated between the parties are in line with market practices.
The deal is expected to be finalized during the second quarter 2018.