France's Fonciere des Regions enters UK market in $1.2 bln hotels takeover deal

Covivio Hotels SCA

03/05/2018 08:59

* Buying 14 hotels from Starwood for 858 mln stg
    * Deal marks its first entry into UK market
    * IHG to sign long-term leases for 13 of the hotels

    PARIS, May 3 (Reuters) - French property group Fonciere des
Regions  FDR.PA  made its first foray into the British market on
Thursday, in a deal to buy 14 upmarket hotels from Starwood
Capital for 858 million pounds ($1.2 billion).
    The transaction will also see InterContinental Hotels Group
 IHG.L  sign long-term leases for 13 of those 14 hotels, with
IHG subsequently rebranding and running those hotels, which are
ranked as four-star and five-star venues.
    Fonciere des Regions said the takeover would allow it to
diversify its portfolio of assets and get a foothold in the
lucrative British market, where tourism numbers have risen
thanks partly to a drop in sterling following Brexit.
    "This acquisition is an opportunity to duplicate the
development strategy already rolled out in France, Germany and
Spain, where Fonciere des Regions is the preferred partner of
active operators on these markets," said Fonciere des Regions
deputy chief executive Dominique Ozanne in a statement.
    "This transaction will help Fonciere des Regions cement its
leading position on the hotel real estate investment market in
Europe," added Ozanne.
    IHG added that the deal with Fonciere des Regions would also
allow it to increase its presence in the upmarket part of the UK
hotels sector.
    Fonciere des Regions added that its Fonciere des Murs
 FMU.PA  subsidiary would launch a share capital increase worth
around 300 million euros to help finance the takeover.
    Starwood Capital said that Eastdil Secured and UBS served as
advisors on the transaction.
    ($1.2 billion)
    ($1 = 0.7350 pounds)

 (Reporting by Sudip Kar-Gupta, editing by Sinead Cruise)
 ((sudip.kargupta@thomsonreuters.com; +33 1 49 49 53 84;))