Mandarin Oriental has, pursuant to a preliminary
sale agreement, acquired an option to purchase the freehold
interest in the building housing the Mandarin Oriental, Paris and
two prime street front retail units from Société Foncière
Lyonnaise 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 option will expire if the sale is not
completed by 15 February 2013.
Mandarin Oriental currently
has a 12-year lease on the hotel, which commenced on 18 April
2011, and which is renewable for a further 12 years, while the
retail units are leased by SFL to third party tenants.
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. Completion of the transaction is expected to occur shortly
after shareholders’ approval has been obtained.
Holdings Limited, which holds a 73.7% direct interest in Mandarin
Oriental International Limited, has given its undertaking to vote
in favour of the Transaction.
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
The property is located on the prestigious Rue St Honoré, within walking distance of
many of the city’s famous cultural
attractions and world class retail outlets.
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 31
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