Accor sells hotels to slash debt

France's Accor has sold 158 hotelF1 budget hotels for €272 million ($398 million) to help it reduce debt, said the group in a statement yesterday.

Accor will continue to operate the hotels under the hotelF1 brand as part of the sale and variable leaseback deal carried out with a consortium of French institutional investors through a property investment trust, it said.

Accor signed a 12-year business lease for the hotels, renewable six times. The variable rent would have been €21.3 million based on 2008 revenue, Accor said. "In a difficult economic environment, the transaction confirms the renewed interest of investors for hotel real estate, and particularly for the low-cost segment," it said.

The transaction will enable Accor to reduce its adjusted net debt by about €187m this year, of which €130m will be added to cash reserves. The deal will boost profit before tax by about €5m, Accor added.

Accor opened the first Formule 1 hotel 25 years ago and renamed the brand hotelF1 in 2007. The budget hotel sector in France has held up well during the economic crisis, whilst demand for Accor's upscale and mid-range hotels has suffered.

The firm last month said it was considering splitting its prepaid services division from its main hotel operat-ions.

 

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