InterContinental Hotels Group PLC has agreed to sell InterContinental London Park Lane to Constellation Hotel (Opco) UK S.A⎯⎯an affiliate of Constellation Hotels Holding Limited. IHG’s leasehold interest in the hotel has been sold for gross cash proceeds of $457 million62 percent above the December 31st net book value.
IHG has secured a 30-year management contract on the hotel⎯⎯with three 10-year extension rights at IHG’s discretion⎯⎯for an expected contract length of 60 years. Management fees are expected to be approximately $6 million per annum. Since becoming a standalone company in April 2003, IHG will have sold 191 hotels for proceeds of $6.1 billion.
Expected to complete in Q2 of 2013, the transaction proceeds will go to general corporate purposes⎯⎯with $93 million used to provide security over UK pension liabilities that were secured against the hotel.
“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,” says Richard Solomons, chief executive of IHG. “It is another step in our long standing commitment to reduce the capital intensity of IHG.”
