Reports suggest imminent sale of AccorHotels' property business

AccorHotels

Reports from Europe today suggest that the sale of AccorHotels' real-estate arm, HotelInvest, is poised to be sold.

Last summer, Europe’s biggest hotel operator announced plans to spin off the unit and eventually sell a majority stake. The move was expected to free up funds for the parent company to expand and improve existing properties.

“The project would enable HotelInvest to initiate a new phase of dynamic growth, by consolidating its existing asset portfolio through renovations, extensions and repositioning, expanding its network through acquisitions and hotel construction, and implementing an assertive asset turnover strategy,” the company said in a statement. 

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According to a Bloomberg report, citing Estates Gazette, France's AccorHotels is "in exclusive talks to sell a majority stake in its €6.6-billion HotelInvest real-estate business."

A consortium of Saudi Arabia's Public Investment Fund, Singapore sovereign wealth fund GIC Pte, French asset manager Amundi and US real estate investment trust Colony NorthStar are said to be the prospective buyers—and were expected to acquire about 80 percent of the unit within two months.

HotelInvest owns and leases about 1,1200 hotels.

In a note to clients last June, Barclays analysts said that separating HotelInvest increases the possibility of mergers and acquisitions involving HotelInvest and HotelServices, which operates AccorHotels’s properties. “This is a particularly live issue in light of the recent stake acquisition by Jin Jiang,” the note claimed, noting that the Chinese investor owns about 15 percent of the hotelier.

Shares in Accor rose as much as 5 percent on news of the possible sale.  

The capital raised from a property sale would help fund new projects to boost operations and expand the company's network, Bloomberg Intelligence analyst Carmen Lee wrote in a January note.

AccorHotels’ assets rose to €7 billion in 2015 from €5.5 billion in 2013, when it set up HotelInvest to buy properties, while its earnings of €973 million in the first quarter of 2016 accounted for about 83 percent of Accor's total earnings of €1.16 billion and about 51 percent of its total EBIT in 2015.

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