IHG announces sale of InterContinental London Park Lane for £301.5m ($457m*)
InterContinental Hotels Group PLC (IHG) [LON:IHG, NYSE:IHG (ADRs)] today announces it has agreed to sell InterContinental London Park Lane (“the Hotel”) to Constellation Hotel (Opco) UK S.A., which is an affiliate of Constellation Hotels Holding Limited, a Middle Eastern private investment group. IHG’s leasehold interest in the Hotel has been sold for gross cash proceeds of £301.5m ($457m*), 62% above 31 December 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 £4m ($6m*) 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, EBITDA of $39m and EBIT of $33m 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 £61m ($93m*) 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 standalone company in April 2003, on completion of this disposal IHG will have sold 191 hotels for proceeds of $6.1bn.
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.”
1. The purchasing entity is Constellation Hotel (Opco) UK S.A..
2. The Hotel has 447 guest rooms.
3. The net book value of the assets sold was £186.6m ($302m) as at 31 December 2012.
4. At current exchange rates the transaction will give rise to an estimated group reported exceptional pre-tax profit on disposal of c.$150m*, with an exceptional non-cash tax charge estimated at c.$30m*.
5. Net cash proceeds are expected to be c.$446m* after:
a. Estimated transaction costs of c.$9m*;
b. Estimated payment of $2m* to settle the pension liabilities of current and former hotel employees.
Note: $93m* of the cash proceeds will be used to provide security over UK pension liabilities which were previously secured against the Hotel.
6. The Hotel assets have been sold on a 16.3.x post fees and post FF&E reserve 2012 EBITDA multiple.
*$ equivalents have been converted at current exchange rates with final $ amounts dependent on the exchange rate on the date of completion
Notes to Editors:
IHG (InterContinental Hotels Group) [LON:IHG, NYSE:IHG (ADRs)] is a global organisation with nine hotel brands including InterContinental® Hotels & Resorts, Hotel Indigo®, Crowne Plaza® Hotels & Resorts, Holiday Inn® Hotels and Resorts, Holiday Inn Express®, Staybridge Suites®, Candlewood Suites®, EVEN™ Hotels and HUALUXE™ Hotels & Resorts. IHG also manages Priority Club® Rewards, the world’s first and largest hotel loyalty programme with over 71 million members worldwide.
IHG franchises, leases, manages or owns over 4,600 hotels and more than 675,000 guest rooms in nearly 100 countries and territories. With more than 1,000 hotels in its development pipeline, IHG expects to recruit around 90,000 people into additional roles across its estate over the next few years.
InterContinental Hotels Group PLC is the Group’s holding company and is incorporated in Great Britain and registered in England and Wales.
Visit www.ihg.com for hotel information and reservations and www.priorityclub.com for more on Priority Club Rewards. For our latest news, visit www.ihg.com/media, www.twitter.com/ihg, www.facebook.com/ihg or www.youtube.com/ihgplc.
This news content was configured by WebWire editorial staff. Linking is permitted.
News Release Distribution and Press Release Distribution Services Provided by WebWire.