InterContinental Hotels Group sells Park Lane hotel for 302m pounds

FTSE 100-listed InterContinental Hotels Group (IHG) has agreed to sell InterContinental London Park Lane to Constellation Hotel UK S.A, which is an affiliate of Constellation Hotels, a Middle Eastern private investment group.

IHG's leasehold interest in the hotel has been sold for gross cash proceeds of £301.5m, 62% above December 31st 2012 net book value.

IHG has secured a 30-year management contract on 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 approximately £4.0m per annum.

The hotel generated revenues of $89m, EBITDA (earnings before interest, tax, depreciation and amortisation) of $39m and EBIT (earnings before interest and tax) 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 used to provide security over UK pension liabilities which were previously secured against the hotel.

Richard Solomons, Chief Executive officer 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."

MF