BRITTANY, FRANCE-Investment firm Eurazeo has sold the223-property B&B Hotel Group, based here, to the Carlyle Groupfor $654 million. The collection of budget hotels across sixcountries amounts to 16,162 rooms.

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The B&B company was started in 1990, and operates at thehigh-end of the low-cost hotel segment, primarily in France,Germany and Italy. Carlyle officials said the firm intends toexpand the company by investing in the continued renovation ofcurrent hotels and by accelerating the property’s opening pacethroughout Europe. The buyer plans to penetrate further into thecore French markets, and significantly expand in Germany (whichaccounts for only 34 properties) and in Poland, Portugal andHungary.

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According to Carlyle officials, the budget hotels sector hasproven to be highly resilient, having increased average daily rateby at least 4% every year since 1999 and grown revenue peravailable room by 2.9% a year. This compares to the entire hotelindustry averaging 0.5% RevPAR per year for the past 10 years.

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Since 2005, B&B has nearly doubled its network from 117hotels in 2005 to 223 hotels today, said Eurazeo officials in astatement. Group revenues totaled $243 million in 2009 versus $112million in 2005, and continued to grow at a rate of 18% in thefirst half of 2010. This sale will generate proceeds of $251million for Eurazeo, based on estimated net debt at the end ofSeptember.

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Franck Falezan, managing director with Carlyle, said B&B iswell-liked by its customers. “[The chain] has had strong marketperformances and strong business resilience during the downturn. Weare confident in the continued high-growth potential of the companyin existing and new European markets,” Falezan said in astatement.

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His firm is a global asset manager, with $91 billion of assetsunder management and committed to 66 funds. Equity for the B&Btransaction comes from Carlyle Europe Partners III, a $7.4-billionbuyout fund, and Carlyle Europe Real Estate Partners III, a$3-billion real estate fund. The Carlyle Group is based inWashington, DC, headquartered at 1001 Pennsylvania Ave.

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