Colony Capital Announces ¥ 1 Billion Strategic Investment in Accor

Los Angeles and Paris, March 9, 2005

Colony Capital LLC, a leading international opportunity fund with more than 15 years of experience investing in global hospitality assets, announced today a definitive agreement to invest ¥1 billion (over US$ 1.3 billion) in Accor, the European leader in the lodging business and the world leader in the economy hotel segment.

This is Colony Capital's largest investment to date in Europe and reflects Colony's belief in the sound fundamentals of Accor, its international leadership positions across regions, with nearly 4,000 hotels in 90 countries, and leading brands, including Sofitel, Novotel, Mercure, Ibis, Etap, Formule 1, Red Roof Inn and Motel 6. Accor also enjoys world-leading positions in services to corporate clients and public institutions, with 14 million people in 34 countries using services and loyalty programs engineered and managed by Accor, that make Accor the world leader in food vouchers. The investment also reflects Colony's confidence in Accor's prospects and strategy, as Accor stands to leverage its international presence to benefit from the fastest growing geographic areas while enjoying diversified operational risk.

The investment by Colony Capital will be structured as follows:

(i) ¥ 500 million in the form of bonds redeemable in shares (ORAs), bearing interest at an annual rate of 4.50% and redeemable into Accor shares at a price of ¥39 per share; the ORAs will mature in 2008; and
(ii) ¥ 500 million in the form of convertible bonds, bearing interest at a annual rate of 3.25% and convertible at the option of the holder into Accor shares at a price of ¥43 per share; the convertible bonds will mature in 2010.

Thomas J. Barrack, Founder, Chairman and CEO of Colony Capital, and Sébastien Bazin, CEO of Colony Capital's European subsidiary and head of Colyzeo, Colony's European fund, will join the Supervisory Board of Accor. In addition, Sébastien Bazin will become Chairman of a Comité des Engagements ("Commitments Committee") of the Board.

This investment cements a long standing relationship between Accor and Colony, dating back to 1998. Accor will be able to leverage the hospitality and real estate expertise of, and the new financial means contributed by, Colony Capital in executing its strategic plan. Accor's development initiatives, in particular in the emerging countries where Colony Capital has been present for many years, will drive accelerated growth going forward.

For Tom Barrack, "The partnership announced with Accor demonstrates our commitment to Accor and its 168,000 employees worldwide. We are gratified that Accor's Supervisory Board and management team, with whom we have worked so productively over many years, has seen fit to support out investment".

Sébastien Bazin added: "This investment, flowing from the close relationships that we have developed with Accor over many years, is a major investment for Colony and a vote of confidence in Accor. We are convinced that with the establishment of this strategic and financial partnership and as the lodging market is showing signs of recovery, Accor will be in a position to quickly benefit from its development initiatives. We look forward to working with the management of Accor to take advantage of these opportunities and further accelerate the development of the Group. This will also be the occasion to work again closely with the Caisse des Dép™ts, an investor in Colyzeo and a very significant shareholder in Accor".

Colony Capital's investment has been approved unanimously by the Supervisory Board of Accor and will be submitted for approval by Accor's shareholders at the next general assembly in May 2005.

Colony Capital was advised by Goldman Sachs International.

The investment by Colony was led by Colony Investors VI and Colyzeo. Colyzeo is the European investment fund created in 2003 from the partnership between Colony Capital and Eurazeo.