Carlyle double act buys €480m hotel chain

Carlyle’s real estate fund invests equity alongside its buyout fund for the €480m purchase of B&B Hotel Group

Carlyle’s latest real estate fund in Europe has teamed up with a Carlyle buyout fund to acquire B&B Hotel Group with an enterprise value of €480 million. 

Carlyle Europe Real Estate Partners III, a €2.2 billion real estate fund raised in June 2008, has acquired the 223-property-strong B&B alongside Carlyle Europe Partners III, a €5.4 billion buyout vehicle.

The acquisition was completed as a secondary trade as the seller was French listed private equity firm, Eurazeo. The parties declined to disclose how much is being paid for the company, however, Eurazeo said the sale would generate proceeds of €184 million.

Carlyle has essentially acquired an operating business with 32 owned hotels in Germany. In 2007 a portfolio of 159 B&B Properties were sold to Eurazeo’s real estate investment unit, ANF, for €471 million, in a leaseback deal.

B&B, which was launched in Brittany, France in 1990 to service business and leisure travelers, operates a chain of 223 budget hotels with 16,000 rooms across France, Germany and Italy. It was launched to service both business and leisure travellers.

Carlyle said it planned to expand the company through renovations of current hotels and by accelerating new openings across Europe. Among the countries to be targeted by Carlyle for expansion will be Germany which currently accounts for only 34 properties in the total portfolio, and Italy. Carlyle also plans entries into new markets including Poland, Portugal and The Netherlands.

Since Eurazeo acquired the group in 2005 from Duke Street Capital, B&B Hotels has nearly doubled in size from 117 hotels in 2005 to 223 hotels while renovating its design and room layout. During this time, group revenues grew to €178 million in 2009 versus €82 million in 2005, and continued to grow at a rate of 18 percent in the first half of 2010. EBITDAR rose from €31.6 in 2005 to €71.2 million in 2009.

Eric Sasson, managing director in the real estate team at Carlyle said the firm was offering the hotel management a “single partner” with “two sets of complementary and relevant skills”, as well as offices and expertise throughout Europe.