The Mirvac purchase wasn’t the only major deal sealed by Accor on May 22, with the global chain selling its United States economy hotels business to an affiliate of Blackstone Real Estate partners for USD$1.6 billion.
The network includes Motel 6, the iconic North American brand, and Studio 6, an extended-stay economy chain, and comprises 1,102 hotels (107,347 rooms) in the USA and in Canada.
“I am delighted by the transaction signed with Blackstone, which ensures the future of Motel 6 and its teams in North America, where we will remain present with luxury and upscale flagships under the Sofitel and Novotel brands,” said Accor’s Chairman and CEO, Denis Hennequin.
“This deal will provide Accor with additional resources to address the tremendous growth potential in the Asia Pacific region, in Latin America and in Europe, where the leadership of our brands is one of the key drivers of our future growth.”
“We are excited about the opportunity to acquire Motel 6 and we look forward to working with its employees and franchisees,” said Blackstone’s Global Head of Real Estate, Jonathan Gray.
“Although Motel 6 will be operated on a stand-alone basis, similar to other lodging investments we have made on behalf of our investors, we plan to invest significant capital in the Company’s properties and to accelerate the expansion of the franchise base.”
According to Accor, the transaction “strengthens the Group’s economic model and follows Accor’s decision to reduce capital employed in Motel 6 and Studio 6, as announced in September 2011”.
“Based on FY 2011 pro forma results, the Group’s restated ROCE increases to 13.9% vs.12.3%, and the EBIT margin reaches 9.2% (vs. 8.7%),” Accor said in a statement.
\The transaction also reinforces Accor’s asset-light profile and further reduces the volatility of the Group’s results, with franchise and management contracts accounting for more than 54% of the pro forma total room portfolio as of March 2012.
“As a result of the transaction, Accor will reduce its net debt by approximately €330m and its fixed-lease commitments by c. €525m. The Group will register an exceptional non-cash loss of c.€600m, linked to the early buyout of fixed-lease hotels,” Accor said.
The transaction is scheduled to be completed in October 2012, subject to the unwinding of leases and customary closing conditions.