France's Fonciere des Regions enters UK market in $1.2 bln hotels takeover deal

* Buying 14 hotels from Starwood for 858 mln stg

* Deal marks its first entry into UK market

* IHG to sign long-term leases for 13 of the hotels

PARIS, May 3 (Reuters) - French property group Fonciere des Regions made its first foray into the British market on Thursday, in a deal to buy 14 upmarket hotels from Starwood Capital (Other OTC: CGHC - news) for 858 million pounds ($1.2 billion).

The transaction will also see InterContinental Hotels Group sign long-term leases for 13 of those 14 hotels, with IHG subsequently rebranding and running those hotels, which are ranked as four-star and five-star venues.

Fonciere des Regions (LSE: 0J6V.L - news) said the takeover would allow it to diversify its portfolio of assets and get a foothold in the lucrative British market, where tourism numbers have risen thanks partly to a drop in sterling following Brexit.

"This acquisition is an opportunity to duplicate the development strategy already rolled out in France, Germany and Spain, where Fonciere des Regions is the preferred partner of active operators on these markets," said Fonciere des Regions deputy chief executive Dominique Ozanne in a statement.

"This transaction will help Fonciere des Regions cement its leading position on the hotel real estate investment market in Europe," added Ozanne.

IHG added that the deal with Fonciere des Regions would also allow it to increase its presence in the upmarket part of the UK hotels sector.

Fonciere des Regions added that its Fonciere des Murs (LSE: 0IS8.L - news) subsidiary would launch a share capital increase worth around 300 million euros to help finance the takeover.

Starwood Capital said that Eastdil Secured and UBS (LSE: 0QNR.L - news) served as advisors on the transaction.

($1.2 billion)

($1 = 0.7350 pounds) (Reporting by Sudip Kar-Gupta, editing by Sinead Cruise)