Accor sells 30 Hotel Properties in the United Kingdom

Accor has has signed a memorandum of understanding to sell 30 hotel properties (5,000 Ibis and Novotel rooms) in the United Kingdom to Land Securities for €711 million.

Accor will continue to operate the hotels under 12-year variable leases, whose rents are based on an average 21% of annual revenues with no guaranteed minimum. The leases are renewable six times, for a total of 84 years (the variable rent for 2006 would have amounted to €41 million).

Expenses related to the real estate and hotel building – structural maintenance capex and insurance costs – will henceforth be borne by the new owner. Finally, the agreement includes a €53 million renovation program financed by the owner.

The transaction enables Accor to partner with a leading UK property company. Land Securities is a FTSE 100 company with a market value of more than €15 billion, which owns property assets in England, Scotland and Northern Ireland. In addition, the agreement signed Monday calls for the creation of a long-term development partnership that will enable Accor to step up its expansion program in the United Kingdom.

Financially, the transaction will enable Accor to reduce its adjusted net debt by €584 million, of which €172 million will be added to the group’s cash reserves. It will have no impact on EBITDA but will add €7 million to 2007 profit before tax. 

Accor's financial advisers on the transaction were NM Rothschild & Sons, with legal and tax advice by CMS Cameron Mc Kenna.

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