Carlyle checks into €480m hotel deal

Eurazeo has sold B&B, France's third-largest budget hotel chain, to Carlyle’s European buyout and real estate funds.

Eurazeo has generated profits of €184 million on the sale of French hotel chain B&B Hotel Group.

The listed private equity firm sold the company to The Carlyle Group, with whom it had been in talks since August.

The sale, which values the company at €480 million, marks the third set of private equity owners for B&B, which has grown steadily since its founding in 1990. 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. In 2007, Eurazeo’s real estate investment unit, ANF, agreed to a €471 million sale and leaseback deal for 159 of B&B’s properties.

The latest transaction was financed with an undisclosed amount of equity from Carlyle Europe Partners III, a €5.4 billion buyout vehicle, and Carlyle Europe Real Estate Partners III, a €2.2 billion real estate fund.
B&B, which was launched in 1990 to service business and leisure travelers, operates a chain of 223 budget hotels with 16,000 rooms across France, Germany and Italy.

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.

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.