FdR readies €400m investment to raise stake in hotel arm

French listed property group Foncière des Régions is spending some €250 mln on the acquisition of a 14.6% stake in its Foncière des Murs (FdM) hotel arm and plans to launch a takeover offer for the remaining share capital.

Paris-listed FdR said it is buying the shares from FdM's shareholders, Generali (10.3%) and ACM (4.3%), which will retain 10.3% and 10.0% respectively following closing of the deal.

The transaction, which brings FdR's stake in FdM to 43.1%, already allows FdR to incorporate the €3.2 bn hotel owner in its results but the French group also plans to launch a takeover bid for the balance of FdM’s capital.

FdR expects to offer €23 a share representing a 1.3% premium on the Triple Net NAV per share, FdR said in a statement.

Shareholders representing a combined 47.7% interest in FdM have already committed not to tender their shares. They include Crédit Agricole Assurances, Cardif, Generali and ACM.

This means that FdR will be able to acquire a maximum 9.2% stake in FdM, representing an additional potential investment of €152 mln.

To finance these hotel acquisitions, FdR said it is considering the launch of a €250 mln capital increase with preferential subscription rights. The capital hike has already been supported by the group's majority shareholders.

JV with Meininger Hotels
It is the latest move by the French property giant to step up its exposure to the high-yielding hotel sector. In December last year, FdR announced the launch of a €400 mln strategic investment partnership with Meininger Hotels to support the hotel brand's expansion across Europe.

Target cities include Amsterdam, Barcelona, Brussels, Berlin, Geneva, Hamburg, Frankfurt, London, Madrid, Milan, Munich, Paris, Rome, Vienna and Zurich, the companies said in a statement.

In the same period FdR also launched a new subsidiary focusing on European hotel properties. The new company, FDM Management, is being created to follow the group’s hotel partners – which currently include NH Hoteles, Louvre Hotels, Pierre & Vacances, Motel One and B&B Hotels - in their expansion across the continent through both acquisitions and new developments.