Sofitel Sells New York and Philadelphia Hotels for $255mil
Accor Remains 25% Owner and Continues to Manage the Hotels
CARROLLTON, TX, January 9, 2007. Accor has announced the sale of two US Sofitel hotels located in New York and Philadelphia, totaling 704 rooms, for US $255 million to a joint venture comprised of GEM Realty Capital, Inc., Whitehall Street Real Estate Fund and Accor. Created in March 2006, the joint venture already owns six US Sofitel hotels in Chicago, Los Angeles, Minneapolis, San Francisco and Washington, DC. Accor will remain a 25% shareholder in the joint venture and continue to manage the hotels under the Sofitel brand name through a 25-year contract.
The transaction is part of the Group's asset management strategy in the upper upscale segment, which is designed to increase the return on capital employed and reduce earnings volatility through sale and management-back arrangements. It effectively completes Accor's transformation of its Sofitel business model for North America, with a hotel base operated primarily under management contracts.
The sale strengthens the original partnership formed between Accor and two reputable hotel real estate investment companies, which offers opportunities for developing the Sofitel network in North America through management contracts.
The transaction will have a positive impact on 2007 profit before tax and will enable the Group to reduce its adjusted debt by more than EUR150 million.
"For our customers, vendors and employees, this partnership has been and will continue to be a seamless transition that will allow us to significantly accelerate the presence of Sofitel throughout North America," said Georges Le Mener, president and CEO of Accor North America. "We have worked together with GEM and Whitehall as true partners these last ten months and will continue our search for further growth opportunities for our joint venture."
"We are truly pleased with the opportunity to expand our relationship with Accor through the acquisition of New York and Philadelphia, bringing our Sofitel portfolio to eight luxury hotels," said Barry Malkin, senior managing partner of GEM Realty Capital, Inc.
Accor North America is a division of Paris-based Accor S.A. GEM Realty Capital, Inc. is a real estate investment company located in Chicago, Illinois. Whitehall Street Global Real Estate Limited Partnership 2005, a real estate investment fund, is sponsored and managed by Goldman Sachs.
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