Mandarin
Oriental acquired an option to purchase the freehold interest in the
building housing Mandarin Oriental, Paris and two prime street front
retail units (collectively, the ‘Property’) from Société
Foncière Lyonnaise (‘SFL’) for €290 million (US$374 million).
The
Group has paid a €10 million (US$12.9 million) advance deposit to
secure the option, and, if the option is exercised, the Group will be
required to pay a further €280 million (US$361 million) to acquire
the Property (the ‘Transaction’). The option will expire if the
sale is not completed by 15th February 2013.
Mandarin
Oriental currently has a 12-year lease on the hotel, which commenced
on 18th April 2011 and which is renewable for a further 12 years,
while the retail units are leased by SFL to third party tenants.
The
Transaction is expected to be partly funded by new five-year €150
million (US$193 million) debt facilities, with the balance to be met
from the Group’s cash reserves.
The
Transaction requires the approval of shareholders, which must be
obtained before 15th February 2013.
Edouard
Ettedgui, Group Chief Executive, said “We believe that the
Transaction offers a rare opportunity to acquire a prime piece of
real estate in a key gateway city which is an important destination
for our luxury brand.”
The
Property is located on the prestigious Rue St Honoré, within walking
distance of the city’s famous cultural attractions and world class
retail. The acquisition is expected to be earnings enhancing and to
bring a number of additional benefits including single ownership and
the opportunity for future expansion for the hotel.
The
Property has a net lettable floor area of approximately 17,400 sq.
m., and had rental income of €10.6 million (US$13.7 million) for
the 12 months ended 31st October 2012.
