Intercontinental Hotel Group (IHG), the world's largest hotel group by room count, has reportedly agreed to sell its controlling stake in the London Park Lane hotel located near Hyde Park and Buckingham Palace, London, for $457 million. The buyer is said to be Constellation Hotels, a part of Qatar Holding Investment fund.
IHG is selling the hotel in an effort to streamline its focus on brand and property management. However, the company will continue to manage operations of the hotel as it has also agreed to a 30-year management contract with three ten-year extension possibilities, reports The Guardian.
According to MarketWatch, the net cash proceeds will be around $446 million after paying $2 million in pension liability settlements and $9 million in transaction costs. IHG is selling the hotel at 62 percent above its book value as on December 31, 2012. The deal will be finalized by the second quarter of 2013.
"The deal 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," Richard Solomons, CEO of IHG, said in a statement to Bloomberg.
Apparently, the prestigious five-star, 13-storey London Park Lane was listed on the market in February 2013. The listing offer had garnered interests from several buyers but the deal was ultimately bagged by Constellation Hotels, reports Evening Standard. The company will have to pay around $30 million in onetime taxes for the Park Lane transaction, which will grant it a pretax gain of around $150 million.
IHG is currently looking to sell off more of its properties. Now that the Park Lane deal is under the escrow, it will focus on selling its New York Barclay hotel in the U.S., reports Bloomberg.
InterContinental's shares rose after the Park Lane deal. It had also recently announced its profit results in February 2013 stating that it had accounted a 10 percent actual operating profit for the year. IHG is also preparing to celebrate its 10-year-anniversary in the hotel industry this April.
