Covivio has entered into exclusive negotiations with AccorInvest to consolidate their jointly held hotel properties and business assets.
Through its subsidiary Covivio Hotels, Covivio owns 54 hotels that are let to AccorInvest under long-term variable rent leases based on revenues. AccorInvest owns the business assets for these hotels and has signed long-term management contracts with the Accor Group.
The consolidation operation would take the form of an exchange of business assets, currently held by AccorInvest, for hotel premises owned by Covivio Hotels. Following this transaction, Covivio Hotels would own 24 hotel operating properties and AccorInvest would own 10.
The agreed value of the properties transferred to AccorInvest represents around €210 million, while that of the business assets acquired by Covivio Hotels is around €260 million. Based on 2022 figures, the assets transferred to AccorInvest represent annual rental income of €9 million, while the business assets acquired by Covivio generate EBITDA of €25 million.
Covivio Hotels is also joint shareholder and asset manager for a further 60 hotels let to AccorInvest and held via two joint ventures, established in 2010 and 2014 respectively: one is 80% held by Crédit Agricole Assurances and 20% by Covivio Hotels, while the other is held by la Caisse des Dépôts, Société Générale Assurances and Covivio Hotels. An exclusive agreement has also been signed with a view to consolidating the property and business assets of 25 of these hotels: 19 hotels for the joint ventures and six for AccorInvest.
These consolidation transactions for Covivio Hotels and the joint ventures represent a total of €390 million in hotel properties transferred, identical to the value of the business assets acquired, thus making the transaction cash neutral. Upon completion, Covivio Hotels and its partners will have consolidated ownership of 43 hotels and AccorInvest 16 hotels.
It is set to be completed during the second half of 2024.
”This project to consolidate the business and property assets of high-potential hotels is a unique opportunity to accelerate the value-creating asset management of our hotel portfolio. By leveraging our real estate and hotel expertise, we aim to reposition some of these hotels to meet changing customer expectations and increase their profitability,” comments Tugdual Millet, CEO Hotels, Covivio.
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