InterContinental Hotels Group has announces it has agreed to sell InterContinental London Park Lane to Constellation Hotel UK, which is an affiliate of Constellation Hotels, a Middle Eastern private investment group.
IHG’s leasehold interest in the hotel has been sold for gross cash proceeds of £301.5 million, 62 per cent above December 31st 2012 net book value.
IHG has secured a 30 year management contract on the hotel, with three ten year extension rights at IHG’s discretion, giving an expected contract length of 60 years.
Management fees are expected to be approximately £4 million 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 $89 million, EBITDA of $39 million and EBIT of $33 million in 2012.
The transaction is expected to complete in the second quarter of 2013, subject to the satisfaction of certain standard conditions.
The proceeds will be used for general corporate purposes, with £61 million 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 February 19th that the hotel was being actively marketed for disposal.
Since becoming a standalone company in April 2003, on completion of this disposal IHG will have sold 191 hotels for proceeds of $6.1 billion.
Richard Solomons, chief executive of IHG, commented: “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 one of the world’s leading luxury hotel brands.
“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, who will be a great partner and with whom we look forward to building a long term relationship.”