InterContinental Hotels Group (IHG) has agreed to sell its InterContinental London Park Lane hotel to the Middle Eastern private investment group, Constellation Hotels Holding Limited’s affiliate Constellation Hotel UK SA.
IHG’s leasehold interest in the hotel has been sold for gross cash proceeds of £301.5m (US$457m), 62 per cent above 31 December 2012 net book value.
IHG has secured a 30-year management contract on the hotel, with three 10-year extension rights at IHG’s discretion, giving an expected contract length of 60 years. Management fees are expected to be approximately £4m per annum.
The hotel was opened in 1975 as a purpose-built InterContinental and has been wholly-owned by IHG since 1999. The hotel generated revenues of $89m and EBITDA of $39m in 2012.
The transaction is expected to complete in the second quarter of 2013. The proceeds will be used for general corporate purposes, with £61m used to provide security over UK pension liabilities, which were previously secured against the hotel.
IHG indicated in November 2012 that the hotel would be the next major asset considered for sale and announced on 19 February that the hotel was being actively marketed for disposal. Since becoming a stand-alone company in April 2003, this disposal, when completed, will mean IHG has sold 191 hotels for proceeds of $6.1bn.
“The transaction we have announced today to sell InterContinental London Park Lane highlights the value of our asset portfolio and the attractiveness of InterContinental as a hotel brand,” says Chief Executive of IHG, Richard Solomons (pictured). “It is another step in our long standing commitment to reduce the capital intensity of IHG. We are very pleased to be working closely with Constellation Hotels, a respected hotel investor, which will be a great partner and with whom we look forward to building a long-term relationship.”
The hotel was 447 guestrooms, 13 meeting spaces with a ballroom for up to 1,000 delegates.
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