Covivio, AccorInvest agree to €393 million asset swap

PARIS — Covivio and AccorInvest announced a deal on Friday to exchange €393 million ($420 million) in hotels, with the goal of simplifying and consolidating each other’s hotel properties and business assets. 

Paris-based diversified European real estate operator Covivio has signed a memo of understanding with Paris-based AccorInvest, an ownership vehicle spun off from Accor in 2013, where Covivio will take back control of 24 hotels valued at €266 million and AccorInvest will get full ownership of 10 hotels valued at €208 million 

The two companies entered into negotiations last November to consolidate their jointly held hotel properties and business assets. The transaction is expected to close by the end of 2024.

Covivio, through its subsidiary Covivio Hotels, owns the real estate for 54 hotels that are let to AccorInvest under long-term variable-rent leases based on revenues. AccorInvest owns and operates the operating companies of these hotels and has signed long-term management contracts with the Accor Group.

“Today marks another important step in our partnership with AccorInvest,”  Tugdual Millet, CEO of Hotels for Covivio, said in a news release. “The agreement will contribute to Covivio’s development in the hotel sector and give us the opportunity to draw on the full range of our real estate and hotel expertise. By repositioning a large part of the portfolio, we intend to strengthen our ability to act directly on its performance, thereby leveraging significant growth potential.” 

According to the release, based on 2023 figures, the assets transferred to AccorInvest represent annual rental income of €11 million, while the operating companies acquired by Covivio Hotels generate EBITDA of around €31 million.

The deal allows Covivio Hotels to acquire operating companies in major tourist areas with value-creation potential through repositioning and management optimization. Some of those hotels will continue to operate under Accor brands (under management or franchise agreements), while others will be rebranded.

Covivio said the transaction helps the company reorganize its hotel real estate toward a more diversified model split between leased and owned assets.

In a news release on LinkedIn, AccorInvest said the deal will allow it to increase operating margins because of a €22 million decrease in leasehold charges.

Joint ventures

Covivio Hotels is also the indirect owner and asset manager of another 60 hotels leased to AccorInvest, held through two joint ventures created in 2010 and 2014. One of the JVs is 80% owned by Paris-based Crédit Agricole Assurances and 20% by Covivio Hotels. The other JV is owned by Paris-based Caisse des Dépôts et Consignations; Nanterre, France-based Société Générale Assurances and Covivio Hotels. 

The agreement provides for the acquisition by Covivio Hotels and its partners of 19 operating hotel property companies for the 2 joint ventures, which will allow them to be consolidated as properties owned and operated by Covivio Hotels and its partners in exchange for the transfer to AccorInvest of six other hotel property companies, which it will then own.

These consolidation transactions for Covivio Hotels and the JVs represent a total of €393 million for the hotel property companies sold by Covivio Hotels and its partners. After the transaction is completed, Covivio Hotels and its partners will have consolidated ownership of 43 hotels, while AccorInvest will have ownership of 16 hotels.