• AXA deal shows equity remains key

AXA Real Estate Investment Managers has acquired a portfolio of six hotels from Foncière des Murs for Eu132.9m on behalf of a joint venture between an investment vehicle of an AXA Group insurance company, Caisse des Dépôts and Sogecap.

The deal was done solely with equity and, with all the hotels recently refurbished, the group is planning to see immediate returns as it follows the recovering European market upwards.

Gael de Lay, head of hotel investment at AXA Real Estate, said: "Acquired without debt, the rents generated from the turnover-linked leases are expected to grow alongside an improving hotel market, which will deliver strong income growth, without the need for material capital expenditure on the assets."

The hotels are currently operated by Accor. Following the deal, AXA Real Estate will manage a portfolio of 99 hotels across Europe on behalf of clients, with a value close to Eu2bn, of which 70 are under Accor brands.

Four of the hotels are in Paris, one in Brussels and one in Gent. In total, they provide 1,569 rooms and were all sourced off-market, in line with current trends identified by agents, who have spoken anecdotally of an increase in off-market deals.


HA Perspective: Although those involved in the transactions market are insistent that debt is now available for doing deals in the hotel sector, not using debt is guaranteed to make a deal easier. The all-equity deal is in contrast to some of the complex transactions done at the height of the boom years, when the focus was to raise as much debt off the minimum possible equity.

AXA Real Estate said that the transaction illustrated a growing trend for club deals, which allowed investors to retain a stronger element of control and adopt a more targeted approach to investment. What this actually means is open to interpretation but one way of looking at it is that debt remains a problem area and if investors want to get interesting deals done, all-equity is the preferred route.

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