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French property group Fonciere des Regions has made its first foray into the UK market, in a deal to buy 14 upmarket hotels from Starwood Capital for £858m.
The transaction will also see InterContinental Hotels Group (IHG) enter into a conditional agreement with the property giant to rebrand and operate 12 luxury hotels and one pipeline hotel across the UK.
The hotels are expected to generate total revenue of GBP75 million and be operationally breakeven from an operating profit perspective during 2018. By 2023, the properties are expected to generate over GBP200 million of revenue and mid-single digit operating profit for IHG.
“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.
‘Bringing Kimpton to such an important market as the UK is a key part of our plans, as is the introduction of our new upscale brand, which will provide an exciting, differentiated offering to both guests and owners,’ said Keith Barr, Chief Executive Officer, IHG.