Accor Agrees to €518 Million Sale Leaseback of 57 Hotels in France and Switzerland

Accor Web Site - December 20, 2007

As part of its real estate management strategy, Accor has announced the signature of a memorandum of understanding to sell 47 hotels in France and 10 in Switzerland to a Real Estate Consortium including Caisse des Dépôts et Consignations and two investment funds managed by AXA Real Estate Investment Managers (European Hotel Venture & Alternative Property Income Venture). The Novotel, Mercure, Ibis, All Seasons and Etap Hotel properties involved in the transaction represent a total of 8,200 rooms.

The €518-million transaction includes a €52-million renovation program at the new owner’s expense. On top of this amount, extensions to two of the existing properties will be financed by the owner for a total of €30 million. Accor will continue to operate the hotels under the same brands through 12-year variable leases, whose rents are based on an average 16% of revenue a year with no guaranteed minimum. The leases are renewable six times, for a total of 84 years. Based on estimated 2007 revenue, the variable rent would amount to €29.6 million (a 5.71% cap rate), net of €3.7 million in insurance costs, property taxes and structural maintenance capex, which are now at the owner’s expense.

This transaction is part of the € 1.9 billion asset disposal program as presented by the Group in September 2007. Accor continues to deploy its innovative asset management strategy designed to both reduce earnings volatility and emphasize the focus on hotel operations.

From a financial standpoint, this transaction will enable Accor to reduce its adjusted net debt by approximately €350 million in 2008, of which € 300 million of cash impact, and will add around €5 million to 2008 profit before tax. Sphere: Related Content