InterContinental Hotels Group PLC announces sale of 13 hotels in the Americas
InterContinental Hotels Group PLC today announces it has agreed to sell 13 hotels in the US, Puerto Rico and Canada to Hospitality Properties Trust at a net sale price of US$425 million (before transaction costs), equivalent to net book value. The transaction is expected to complete in the first quarter of 2005, with IHG retaining long term management contracts on the properties.The properties will be sold for a cash price of US$450 million, with IHG allocating US$25 million of the proceeds for capital expenditure on the 13 hotels over the next three years. The remaining $425 million of net disposal proceeds will be used for general corporate purposes, including paying down US dollar denominated debt, returning funds to shareholders and investing in the business.
The 13 hotels (3,946 rooms) form part of the tranche of 20 properties IHG placed on the market in July 2004 as part of its ongoing asset disposal programme and consist of InterContinental hotels in Toronto, Houston, San Juan and Austin, four Crowne Plaza hotels, three Holiday Inn hotels and two Staybridge Suites properties.
The hotels will continue to be managed by IHG under a 25 year management contract with HPT, with the exception of the contract on the InterContinental San Juan which, for technical reasons, is structured as an operating lease but with effectively the same economic structure as the management contract. IHG has two consecutive options to extend the contracts on the properties for 15 years each, giving a total potential contract length of up to 55 years.
Richard Solomons, finance director of IHG, commented:
“This transaction represents another significant step forward for IHG and builds on our strong relationship with HPT. This demonstrates our ability to continue to deliver on our stated strategy of reducing capital intensity by selling hotels at attractive prices whilst retaining our brand on the properties.”