B&B

On July 23, 2007, ANF agreed to acquire a portfolio of 159 hotel properties from B&B (11,455 rooms) for €471 million, including transfer taxes and expenses (€450 million excluding transfer taxes and expenses).

These hotels, spread across the whole of France, are operated by B&B, France’s third largest budget hotel chain. Triple net leases have been signed for an initial minimum period of 12 years, renewable twice at B&B’s behest, for fixed, indexed rents amounting to an initial €27.3 million before VAT. At the end of the initial 12-year period, the lease will be renegotiated within limits that have already been contractually agreed. To finance this transaction, €182 million in long-term debt was arranged, with the balance being financed by the October 2007 capital increase. This acquisition was accompanied by the signing of a partnership agreement, which means that ANF can play an active part in the expansion of the B&B hotel chain for three years on the basis of a programme of identified investments worth about €58 million. The B&B hotels are especially visible and are located near main road arteries while having easy access to road networks. This quality location gives true value to the portfolio of B&B hotel properties.
In 2009, ANF acquired five B&B hotels for €21 million. The €1.3 million in annual rental income is fixed and linked to the ILC index (Indice des Loyers Commerciaux – Commercial Rent Index, published by INSEE). As part of the partnership agreement with B&B, ANF acquired four B&B hotels located in Lille, Valenciennes, Saint Denis and Arras. Outside the partnership agreement, ANF acquired one 46-room B&B hotel located in the Bourges region for €1.5 million excluding transfer taxes.

The partnership entered into with B&B also stipulates that ANF will pay for work to improve the hotels acquired in October 2007. In the course of 2009, €13.8 million excluding VAT was invested representing close to €800,000 in annual rental income excluding tax and indexation.Over the year, the B&B rental income was indexed 0.84% to reflect the annual change in the ILC index. Indexation represents a total of €0.2 million on an annual basis. Financing for the partnership with B&B is provided by a credit facility arranged in October 2007 at a cost of Euribor +55 basis points. All the contractual obligations, both construction work and hotel acquisitions, are covered by a specially tailored credit facility. Furthermore, all the debt drawn down is at a fixed rate of 4.94%.

Since 2007, ANF has improved the financial performance of its hotels by means of a proactive debt hedging policy. In fact, while the income from the hotels rose – mainly thanks to the impact of the 2008 indexing – the marginal borrowing cost fell in tandem with the fall in interest rates.