Carlyle Closes on $654M Buy of B&B

BRITTANY, FRANCE-Investment firm Eurazeo has sold the 223-property B&B Hotel Group, based here, to the Carlyle Group for $654 million. The collection of budget hotels across six countries amounts to 16,162 rooms.

The B&B company was started in 1990, and operates at the high-end of the low-cost hotel segment, primarily in France, Germany and Italy. Carlyle officials said the firm intends to expand the company by investing in the continued renovation of current hotels and by accelerating the property’s opening pace throughout Europe. The buyer plans to penetrate further into the core French markets, and significantly expand in Germany (which accounts for only 34 properties) and in Poland, Portugal and Hungary.

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

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

Franck Falezan, managing director with Carlyle, said B&B is well-liked by its customers. “[The chain] has had strong market performances and strong business resilience during the downturn. We are confident in the continued high-growth potential of the company in existing and new European markets,” Falezan said in a statement.

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