French join forces with IHG to launch £ 858m hotels raid

● Four well- known Scottish properties part of major rebranding agreement

French property giant Fon - cie red es Regions made its first foray into the UK market yesterday with a deal to buy 14 luxury hotels from Star wood Capital for £ 858 million.

The transaction will also see Intercontinental Hotels Group ( IHG) sign long- term managed leases to operate 13 of those four- and- five- star hotels including four wellknown properties in Edinburgh and Glasgow.

They are The Principal in Charlotte Square and The Principal in George Street, Edinburgh, and The Principal in Blythswood Square and Principal Grand Central, both in Glasgow – all of which along with the other hotels changing hands will be rebranded by IHG within one to two years.

IHG said yesterday’s deal will establish it as “the leading luxury hotel operator in the UK, taking it to more than 2,000 rooms in this valuable, fast growing segment.

“It will expand the presence for the Intercontinental brand, and enable I HG to launch its leading luxury boutique brand, Kimpton Hotels & Restaurants, in the UK, adding multiple hotels for the brand in prime locations in major city centres, including London, Manchester and Edinburgh”.

Other hotels involved include The Principal, London; The Principal StDavid’s in Cardiff; The Principal in York; The Principal Met in Leeds and The Principal Oxford Spires. Some De Vere brands are also involved in the transaction, including De Vere Oxford Thames.

Keith Barr, CEO of IHG, said: “We are focused on continuing to expand our leadership in luxury and up scale, which are both high- value segments with significant growth potential.

“Bringing Kimpton to such an important market as the UK is a key part of our plans, as is the introduction of our new up scale brand, which will provide an exciting, differentiated offering to both guests and owners. Together with the recent addition of Regent Hotels & Resorts to our portfolio, we are building real momentum.”

Foncie red es Regions said the takeover would allow it to diversify its portfolio of assets and get a foothold in the lucrative British tourism market, where tourism numbers have risen thanks partly to a drop in sterling following the Brexit vote.

“This acquisition is an opportunity to duplicate the development strategy already rolled out in France, Germany and Spain, where Fonciere des Regions is the preferred partner of active operators on these markets,” said Fonciere des Regions deputy boss Dominique Ozanne.

“This transaction will help Fonciere des Regions cement its leading position on the hotel real estate investment market in Europe.” Fonciere d es Regions added that it would launch a share capital increase worth about € 300m (£265 m) to help finance the deal.

By 2023, these properties are expected to produce £ 200m of revenue for IHG.