French hotel operator Accor has negotiated a sale-and-leaseback deal on one-third of its UK portfolio. It has agreed heads of terms to sell 30 hotels to Land Securities Trillium (LST), the property partnership business of Land Securities Group.
The sale is worth £439m and LST has pledged to inject around £35m in cash over the next four years to improve the properties. Land Securities Trillium will lease the hotels back to Accor on 84-year leases and charge a rental income based on an agreed percentage of turnover. Based on their 2006 performance, the 30 hotels would have generated an annual gross rent of more than £27m.
The hotels involved are mostly city centre properties operated under the two-star Ibis and three-star Novotel brands, with a strong weighting towards London.
“This partnership, as part of Accor’s real estate management strategy, will allow Accor to accelerate its expansion plan in the UK and de-risk its operational structure by moving to a fully variable lease arrangement,” commented Jacques Sterm, chief financial officer at Accor.
Ian Ellis, chief executive of LST, said the deal represented the first step in a long-term relationship with Accor as its UK property partner.
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By Angela Frewin
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