The Blackstone Group continues its buying spree on behalf of its Blackstone Real Estate Partners VII fund, signing an agreement with global hotel operator Accor to buy its US economy hotels division for $1.9 billion. The purchase comprises the Motel 6 budget chain of North American hotels.
As a result of the deal, Paris-based Accor will reduce its net debt by approximately €330 million and its fixed-lease commitments by roughly €525 million. In addition, Accor will register a non-cash loss of around €600 million, linked to the early buyout of fixed-lease hotels.
Jonathan Gray, global head of real estate for the New York-based private equity giant, said in a statement: “Although Motel 6 will be operated on a stand-alone basis, similar to other lodging investments we have made on behalf of our investors, we plan to invest significant capital in the company’s properties and to accelerate the expansion of the franchise base.”
All told, the network of hotels comprises more than 1,000 hotels in the US and Canada. The transaction is scheduled to be completed in October of this year.
“This deal will provide Accor with additional resources to address the tremendous growth potential in the Asia-Pacific region, in Latin America and in Europe, where the leadership of our brands is one of the key drivers of our future growth,” said Denis Hennequin, chairman and chief executive officer of Accor. He noted that Accor will maintain a North American presence via its Sofitel and Novotel brands.
The purchase marks the largest US hotel chain acquisition since Extended Stay America was bought out of bankruptcy for $3.93 billion by an investment consortium that included Blackstone, Paulson & Co. and Centerbridge Partners in October 2010. The biggest hotel deal that Blackstone was involved in occurred in 2007, when the firm bought renowned global hotel chain Hilton Hotels for $20.1 billion, making Blackstone one of the largest hotel owners in the world.