Carlyle’s $653M Purchase of France’s B&B Hotel Group a Done Deal

Over its 20 years in existence, B&B has built a 16,162-room portfolio of what the company describes as "high end" budget hotels designed to appeal to business and leisure travelers at locations in France, Germany and Italy.

October 1, 2010
By Barbra Murray, Contributing Editor

The Carlyle Group has expanded its European hotel portfolio by 223 properties in one fell swoop with the closing of the acquisition of the B&B Hotel Group. The global alternative asset manager purchased the hotel concern from European investment firm Eurazeo in a deal valued at about $653.3 million.

Over its 20 years in existence, B&B has built a 16,162-room portfolio of what the company describes as “high end” budget hotels designed to appeal to business and leisure travelers at locations in France, Germany and Italy. Carlyle real estate managing director Eric Sasson noted that the firm’s ability to offer B&B’s management team a single partner with two sets of complementary and relevant skills, along with offices and expertise throughout Europe, was central to setting Carlyle apart from other suitors. Carlyle brings to the table a particular knowledge of both real estate and leisure groups.

With Carlyle at the helm, B&B will be in growth mode. Carlyle intends to increase the presence of the lodging company’s hotels in France and Italy, and significantly boost its foothold in Germany, where B&B has just 34 properties. A spokesperson told CPE that Carlyle’s immediate priority will be on expanding B&B in Germany, where it sees a strong opportunity for growth, and that the company will also consider other countries where there is a similarly highly fragmented budget hotel market and a definitive supply/demand imbalance. For starters, Carlyle plans for B&B to make its entry into Poland, Portugal and The Netherlands.

It is not every company in the U.S.–or any other country, for that matter–that can plunk down over half-a-billion on a hotel real estate investment. Carlyle relied on capital from its $7.3 billion Carlyle Europe Partners III buyout fund and the $3 billion Carlyle Europe Real Estate Partners III fund. And in terms of other moves to further expand its commercial real estate holdings–Carlyle’s real estate assets currently under management total $11 billion–the company just made its debut in the U.K.’s student housing market with the purchase of a site in London and the establishment of a joint venture with General Estates Limited. And in June, acting through its two-year-old Carlyle European Real Estate Partners III fund, Carlyle shelled out $1 billion for a 1.6 million square-foot group of Central London office properties from the former White Tower portfolio.