InterContinental Hotels Group Plc (IHG,IHG.L) Thursday said it has agreed to sell its London Park Lane Hotel to Constellation Hotel UK S.A., for gross cash proceeds of 301.5 million pounds or $457 million, 62 percent above its net book value as at the end of December, 2012.
Constellation Hotel UK S.A., is an affiliate of Constellation Hotels Holding Ltd., a Middle Eastern private investment group. The transaction is expected to be completed in the second quarter of 2013.
InterContinental 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 about 4 million pounds per annum.
London Park Lane was opened in 1975 and has been wholly owned by IHG since 1999. The Hotel generated revenues of $89 million and EBITDA of $39 million in 2012.
Richard Solomons, chief executive of the company stated, "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."
Solomons said the sale of London Park Lane is another step in the company's long standing commitment to reduce capital intensity. InterContinental will use the proceeds for general corporate purposes, with 61 million pounds to provide security over UK pension liabilities which were previously secured against the hotel.
InterContinental said it has sold 191 hotels for proceeds of $6.1 billion since it became a standalone company in April 2003.
IHG.L is currently trading at 2010.68 pence, up 58.68 pence or 3.02 percent, on a volume of 177,745 shares.
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