AC Accor

PARIS—French hotel group AccorHotels SA said Wednesday it has entered into exclusive talks to sell 85 hotels in Europe with a value of €504 million as part of a sale and franchise-back deal.

The company—which operates hotel chains including Sofitel, Mercure and Ibis—said the hotels would be sold to a newly created entity which will be 30% owned by AccorHotels and 70% owned by French investment firm Eurazeo SA. The portfolio includes one Pullman, 19 Novotel, 13 Mercure, 35 ibis, 3 ibis Styles and 14 ibis budget hotels, Accor said.

"This wide-reaching, innovative transaction is another key step in the transformation of HotelInvest. We are delighted to be contributing to the emergence of a major new hotel investor in the European market, which we intend to support over the long term," said John Ozinga, Chief Operating Officer of HotelInvest, which manages the company's real estate portfolio.

The move comes as part of a continuing turnaround launched by AccorHotels Chief Executive Sé bastien Bazin when he took on his role in 2013. One of Mr. Bazin's first moves was to split the hotel group into two business poles: one that runs the group's hotel brands, and another that focuses on ownership and investment.

The hotels included in the transaction will maintain the AccorHotels brand. AccorHotels also owns the buildings of 28 of the hotels being sold. The buildings of the other 57 are owned by institutional investors.

The newly created entity buying the hotels will also have a budget of more than €100 million for renovations, AccorHotels said in a statement.

Write to Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

January 27, 2016 13:25 ET (18:25 GMT)

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