Michelle Napoli is editor of Net Lease forum, from which this article is excerpted.

Paris—Locally based hotelier Accor SA and London-based Land Securities Trillium, the property partnership business of Land Securities Group PLC, agreed to a 30-property sale-leaseback with an acquisition price of 439-million British pounds or about US$857 million. The deal involves 5,000 rooms in properties under the Ibis and Novotel brands in city center locations in the United Kingdom, with a particular weighting in London.

As part of the arrangement, Accor will continue to manage the properties with an initial 12-year term plus ensuing 12-year renewals. The aggregate lease term is for 84 years. The rent is variable, but would have totaled 41 million euros (or about US$53.87 million) in 2006. Land Securities Trillium also agreed to finance 53 million euros of renovations to the properties during the next several years.

"This partnership, as part of Accor's real estate management strategy, will allow Accor to accelerate its expansion plan in the UK and de-risk its operational structure by moving to a fully variable lease arrangement," states Accor CFO Jacques Stern. Accor was advised in the transaction by NM Rothschild & Sons and CMS Cameron McKenna. The deal is the latest example of hotel and lease or manageback transactions that have taken place recently in the European market. Ratings agencies have looked favorably upon hotel operators selling assets to pay down debt. (See this issue's "Ratings Update" for information on a recent rating action on Hilton Hotels Corp.)