Freewheeling into summer

We’re all looking for a bit of the familiar and this week was very comforting for fans of Getting Deals Over The Line Before Shoving Off For The Summer. The rust is coming off the chain and, after a slow grind up hill, it’s good to feel the wind in our hair. 

For those looking to embrace shiny new trends, both of this week’s deals also slotted happily into what has been widely forecast, so a little something for all of us this week.

First to The Student Hotel and a deal which has been piquing interest for a while. It fits into all the flexible, mixed-use needs which have been front of skull for investors since they realised that hotels could be shut down by pandemics, as Lee Kok Sun, CIO real estate, GIC – one of those piling in, along with APG – noted when he drew attention to “resilient long-term returns”. 

Alternative models, community, reworked city centres, it’s all very familiar to GIC and APG, given their investment in CitizenM, another group with an appetite for testing what newness the pandemic could offer, through their subscription model. 

To add in even more flexibility, TSH is investing in technology to implement the first space/time booking platform across its hotels, meaning that guests will be able to book any space in TSH buildings for a defined period of time – from meeting rooms and co-working desks to gym and pool access and ping pong tables. 

So really, all the flexible hits in one and a valuation of €2.1bn.

Also getting valued at more than €2bn was Ennismore, Accor’s leisure and lifestyle division and source of more than a few ‘huh, so what’s that all about then?’ conversations when the pair first came together 18 months ago.

It is now becoming a little clearer, in as much as the 4D chess world of Accor is ever clear. The group is in negotiations to sell a 10.8% stake in Ennismore to the Qataris – hurrah! Familiar! Accor loves selling stuff to the Qataris! – and raise €185m in the process. 

There was no mention this time of the separate structure holding the formerly leased assets created with a fund managed by Keys REIM, but we continue to watch this with interest. 

Now €185m is not an immense amount (you or I would be happy to find it in our bank accounts, but that aside) but worth doing if you can get it for not that much. Accor’s Ennismore stake before the deal was 66.7%. After: 62.2%, having also rolled in Rixos and Paris Society. So the sale of 10.8%? Not so much impact on Accor, with the remainder of Ennismore divided up by Sharan Pasricha and the incoming investors.

So what to do with one’s €185m. Not a massive war chest but not to be sniffed at as deals start to get done, and bear in mind that, at the end of December 2021, combined with the two undrawn credit facilities of €1.8bn, Accor had a liquidity position of €3.4bn. So if it fancies making a move, it can.  

What this deal does is point a neon sign at Ennismore, y’know, in case anyone fancies buying it/spinning it off. The press release makes a point of saying: “The envisioned transaction reflects Accor’s continued simplification strategy pulling together its lifestyle & leisure activities within one single dedicated entity”.

One easily spun-off entity? Rumours pop up from time to time linking Accor to a division of its parts – usually favouring the economy brands – but Ennismore would make a tasty prize for anyone wanting to get into lifestyle. And everyone does. 

Accor often complains about how it doesn’t get valued properly. This deal serves to highlight how much one bit of it is worth. Time to ring the starter’s bell?

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