InterContinental Hotels Group has sold a portfolio of 24 hotels (4,903 rooms) to a subsidiary of Westbridge Hospitality Fund LP. Westbridge is a hospitality investment fund managed by Westmont Hospitality, one of IHGs largest franchisees.
The portfolio has been sold for 352m (approximately £240m), marginally above net asset value.
Proceeds to IHG in cash and debt assumption are 345.2m (before transaction costs), with the balance of 6.8m relating to third party minority interests.
The hotels have been sold to Westbridge with 15 year franchise contracts. Normalised franchise fees are expected to be approximately 4m per annum.
The hotels are located in Continental Europe and operate under the Crowne Plaza, Holiday Inn, and Express by Holiday Inn brands. The transaction is expected to complete in the second quarter of 2006.
The hotels generated revenues of 140m, EBITDA of 28m and EBIT of 11m in 2005.
These disposals represent a continuation of IHGs strategy to grow its managed and franchised business and reduce asset ownership. Since separation in April 2003, IHG has disposed of, or is in the process of disposing of, 175 hotels with a net asset value of more than £2.8bn.
Aggregate proceeds received to date have been above net asset value. IHG has announced the return of £2.75bn to shareholders, of which £2.0bn has already been completed. Proceeds received from the disposal will be used for investment, returns to shareholders, or managing IHGs debt position.
Andrew Cosslett, Chief Executive of IHG, commented:
“This deal is another significant step in the transformation of IHG. As we focus on managing and franchising hotels, it is essential that we continue to develop our relationships with key partners on a global basis. Westmont Hospitality is one of IHGs largest franchisees, and we are delighted to extend our strong relationship with them.”