InterContinental Hotels Group has agreed to sell its London Park Lane hotel to the Middle Eastern private investment group Constellation Hotels Holding.
InterContinental Hotels Group has agreed to sell its London Park Lane hotel to the Middle Eastern private investment group Constellation Hotels Holding.
The price of £301.5 mln (€358 mln) in cash is 62% above the asset's net book value per year-end 2012 (£187 mln).
IHG has secured a 30-year management contract for the hotel, with three 10-year extension rights at IHG's discretion, giving an expected contract length of 60 years. Management fees are expected to be £4 mln per annum.
The 447-room hotel was opened in 1975 as a purpose-built InterContinental and has been wholly owned by IHG since 1999. It generated revenues of $89 mln and EBITDA of $39 mln in 2012.
The transaction is expected to complete in the second quarter of 2013.
IHG said the proceeds will be used for general corporate purposes, with £61 mln 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. Since becoming a stand-alone company in April 2003, on completion of this disposal IHG will have sold 191 hotels for proceeds of $6.1 bn.
'The transaction is another step in our long-standing commitment to reduce the capital intensity of IHG,' said Richard Solomons, chief executive of IHG.
