IHG has also sold a further hotel, Holiday Inn, Suva, to FNPF Investment Limited (FIL) the wholly-owned subsidiary of the Fiji National Provident Fund (“FNPF”) for A$15 million (£6 million) in cash, bringing the total sale price of the ten hotels to A$405 million (£170 million).
IHG will continue to manage the hotels for Eureka and FNPF under ten year management contracts, each with an option to extend for ten further years at IHG’s discretion. Management fees in the first full year are expected to be ca. US$4 million. The transactions are expected to complete in the fourth quarter of 2005. Proceeds will be used for general corporate purposes.
The ten hotels (2,310 rooms) were placed on the market in April 2005 as part of IHG’s continuing asset disposal programme. They consist of InterContinental Wellington in New Zealand, three Crowne Plaza hotels in Australia, five Holiday Inn hotels in Australia and Holiday Inn Suva in Fiji.
Andrew Cosslett, Chief Executive, IHG commented: “The team in Australia have secured a deal which has resulted in transaction terms beyond our initial expectations and attractive long term contracts. We are delighted to be establishing long term relationships with business partners of the calibre of Eureka and FNPF. They join a growing group of leading investors world wide, who have demonstrated their faith in InterContinental Hotels Group brands and expertise.”
Bob Kelly, Managing Director of Eureka, stated: “The transaction reflects the increased acceptance of the hotel sector by its institutional investors. We look forward to a strong relationship with InterContinental Hotels Group. The brand diversity, location spread and strong business foundation which have been laid by the Group through its ownership and management over the years were the key attractions of the portfolio of hotels to Eureka.”