• Accor shrugs off the crunch

Accor demonstrated at the end of last year that the appetite for hotel property remains robust despite the credit crunch. It sold 57 French and Swiss hotels for Eu518m just before Christmas.

The buyer, a real estate consortium comprising insurance giant AXA and investment fund Caisse des Depots et Consignations, is also partnering with Accor to develop hotels.The deal encompasses 8,200 rooms under brands including Novotel, Mercure, Ibis, Etap and new conversion concept All Seasons. The deal value includes a Eu52m renovation programme.

The properties are on 12-year renewable lease, renewable six times giving Accor occupancy for 84 years. Rents are based on 16% of turnover with no minimum. The current rent is Eu29.6m, net of Eu3.7m insurance costs, property tax and maintenance capex which are all now the responsibility of the owner.

According to analysts at investment bank Jeffries the implied yield is 5.7% which they described as an "excellent price".

The transaction is part of the Eu1.9bn of disposals that Accor promised in September as part of its move to reduce asset intensity and earnings volatility. The deal will reduce Accor's net debt by around Eu350m in 2008 and add Eu5m to profits before tax.

Meanwhile Colony Capital, which already holds 10.7% of Accor's shares, is buying a further Eu500m worth via a deal with an unnamed bank. The bank is holding the shares as Colony is barred from buying further into Accor through a lock-out agreement until the end of this month.

Colony is to pick up any gains on the shares and likewise meet any loss. Accor's share price slumped to a 14-month low just before Christmas.

This has not caused too much gloom in Accor's Paris headquarters and CEO Gilles Pelisson was talking up the group's prospects at the start of this year, even mooting that a dollar acquisition was possible.

The main focus for 2007 was disposals and this trend is set to continue into 2008. During last year Accor sold its US economy chain in a deal that closed in September for $1.3bn. In Europe it also sold 91 hotels to Moor Park and 30 to Land Securities.

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