An Attractive Exchange Operation
Covivio Hotels owns 54 hotels leased to AccorInvest on a variable revenue-based rent under long-term leases. AccorInvest owns the business assets of these hotels and has signed long-term management contracts with the Accor Group. The recombination operation would take the form of an exchange of business assets currently held by AccorInvest for hotel properties owned by Covivio Hotels. Following the operation, 24 hotels would be owned in both property and business assets by Covivio Hotels, and 10 by AccorInvest. The agreed value of the properties transferred to AccorInvest is approximately €210 million, and the agreed value of the business assets acquired by Covivio Hotels is approximately €260 million. Based on 2022 figures, the annual rents for the assets transferred to AccorInvest amount to €9 million, and the EBITDA of the business assets taken over by Covivio Hotels is €25 million.
A New Step for Joint-Venture Owned Hotels
Covivio Hotels is also a co-shareholder and asset manager of 60 other hotels leased to AccorInvest, held through 2 joint-ventures created between 2010 and 2014: one owned 80% by Crédit Agricole Assurances and 20% by Covivio Hotels, and the other owned by Caisse des Dépôts, Société Générale Assurances, and Covivio Hotels. An exclusivity agreement has also been signed for the recombination of property and business assets of 25 of these hotels: 19 for the joint-ventures and 6 for AccorInvest. In total, the recombination operations on Covivio Hotels and the joint-ventures result in a value of hotel properties transferred of €390 million, equivalent to that of the business assets acquired, making the operation cash-neutral. Following the operation, Covivio Hotels and its partners will have recombined 43 hotels, and AccorInvest will have 16 hotels.
The Hotel Industry: A Dynamic and Resilient Sector
This operation comes at a time when the European hotel market has once again demonstrated its ability to overcome crises, perform consistently, and adapt to new expectations. Established in 2005, Covivio Hotels has continuously evolved its portfolio in terms of categories, operators, and management methods. Over the past decade, the group has developed expertise in property and business asset management (now accounting for 23% of the portfolio) through significant acquisitions in Germany, France, Belgium, and more.
With this operation, Covivio Hotels aims to strengthen its ability to directly influence the performance of its portfolio by repositioning some of the hotels it has owned for nearly 20 years, thereby benefiting from significant growth potential.
The operation would allow Covivio Hotels and its partners to acquire business assets located in highly attractive tourist areas with significant potential for value creation through repositioning and management optimization. Some of these hotels may continue to operate under Accor brands (under management or franchise contracts), while others may undergo a brand change.
This accretive and strategic operation would mark a new milestone in the development of Covivio Hotels toward a more diversified model (leased assets, property and business assets). On a pro-forma basis, Covivio Hotels’ revenue structure would consist of 54% fixed revenue and 46% variable revenue (primarily EBITDA from property and business assets, while the share of variable rents, currently at 20%, would decrease to 7%).
The operation will soon undergo information and consultation by the social and economic committees of Covivio Hotels and AccorInvest, and it will be subject to certain suspensive conditions and customary due diligence. It is expected to be finalized in the second half of 2024.
This property and business asset recombination project for hotels with strong potential is a unique opportunity to accelerate the value-creating asset management work of our hotel portfolio. Leveraging our real estate and hotel expertise, we aim to reposition some of these hotels to meet evolving customer expectations and increase profitability. Tugdual Millet, CEO of Covivio Hotels
About Covivio Hotels
Covivio Hotels specializes in the ownership of operating properties in the hotel sector. As a Real Estate Investment Trust (REIT) and a real estate partner to major players in the hospitality industry, Covivio Hotels holds a portfolio valued at €6.6 billion. Covivio Hotels is rated BBB+ with a Stable outlook by Standard and Poor’s.
About Covivio
Drawing on its collaborative history, real estate expertise, and European culture, Covivio is shaping today’s user experience and envisioning the city of tomorrow. As a preferred real estate player on the European stage, Covivio engages with end-users, understands their aspirations, combines work, travel, living, and co-creates vibrant spaces.
As a leading European operator with €24.8 billion in assets, Covivio supports companies, hotel brands, and regions in their challenges related to attractiveness, transformation, and responsible performance. Building well-being and lasting connections is Covivio’s raison d’être, reflecting its role as a responsible real estate operator for all its stakeholders: clients, shareholders and financial partners, internal teams, communities, and future generations. Furthermore, its dynamic approach to real estate offers its teams exciting prospects for projects and careers.
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