The property subsidiary of Caisse de dépôt et placement du Québec, Canada's largest pension fund, has acquired Red Roof Inns, a chain of US hotels from Accor for US$1.32bn (960m). Cadim, the subsidiary, acquired the portfolio as part of a consortium that also comprised Citigroup's Global Special Situations Group and the Westmount hospitality fund. Diversification is driving Caisse's interest in the hospitality sector.
Spokeswoman Annie Vallières said that an existing partnership with the Westmount fund had provided the opportunity to "get in the economy [discount hotel] sector". The chain includes 326 properties, including motels, on the US East Coast and in the Midwest. "We know Citi and have done some deals with them in the past," she added. "Big transactions are usually made in consortium or partnership to share the risk." A confidentiality clause in the agreement covers each partner's stake in the deal. Caisse is unlikely to limit its interest to North American markets. "We are a global player with a global relationship with Westmount," said Vallières. "Together, we identify deals of interest."
Last September Cadim acquired one of five Canadian hotels sold by the Hilton Hotels Corporation. Hilton continues to manage the hotel under a multi-year management agreement. Hospitality made up 5.2% of the fund's real estate portfolio as of the end of 2006. Real estate makes up 9.8% of the fund.
Source: IPE/Shayla Walmsley