AXA REIM buys Accor hotel portfolio for EUR 470m

AXA REIM has completed the acquisition from hotel group Accor of the first tranche of a portfolio of 57 hotels in France and Switzerland. The transaction stems from an agreement signed by AXA REIM and Accor in December 2007. AXA REIM was acting on behalf of a consortium of investors including French bank Caisse des Depots et Consignations and AXA's investment funds European Hotel Venture (EHV) and Alternative Property Income Venture (APIV).

AXA has now finalised the acquisition of 49 hotel sites, with the purchase of the rest of the assets due to be completed by the end of the year. The total transaction comes to around EUR 466mln, AXA REIM said in a statement on Monday. Under the agreement, Accor will also carry out a EUR 78mln redevelopment of the assets over the next three years, of which around EUR 51mln is due to be paid by the buyers. The hotel group will also expand two sites for a further investment of EUR 30mln, AXA said.

The hotels are operated under the brands Novotel, Mercure, MGallery, All Seasons, Ibis and Etap Hotel. Financing was provided by BNP Paribas, Calyon, HSBC France and Natixis. Accor will continue to operate these hotels under a lease contract providing for a variable rent representing on average 16% of the annual turnover. The lease duration is for an initial term of 12 years with six renewal options. As part of the transaction, the parties will work together on the potential development of further budget and mid-range hotels in France and Switzerland.

In a statement, AXA noted that the transaction brings to over 80 the number of hotels managed by the compnay for its clients. The French asset manager said that the deal shows its intention to boost its exposure to this asset class across Europe.

Managed by AXA, European Hotel Venture (EHV) targets a size of EUR 1.5bn by 2010. The fund invests in business & leisure hotels across budget and mid-range sectors in Europe's principal hotel markets. Alternative Property Income Venture (APIV) has a war chest of approximately EUR 1.6bn. The fund invests in alternative real estate assets across Europe, including automotive, medical and leisure related properties.