InterContinental Hotels Group PLC (IHG) 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.