IHG agrees $938 sale of InterContinental Hong Kong
LONDON - ReutersInterContinental Hotels Group said on July 10 it had agreed to sell InterContinental Hong Kong to a consortium of investors for $938 million and may return some of the proceeds to shareholders.
IHG, one of the world’s largest hoteliers, said it would retain a management contract on the hotel which has 503 guest rooms and is situated on the Kowloon waterfront with panoramic views of Victoria Harbor.
It is being sold to Supreme Key Limited, a consortium of investors advised and managed by Gaw Capital Partners, the real estate private equity fund management firm.
IHG said the sale of the hotel completed the disposals of its major owned assets. Like some rivals, IHG has pursued an “asset-light” strategy of selling off its hotels and then managing them under contracts.
It has now sold almost 200 hotels for gross proceeds of almost $8 billion, helping it to return more than $10 billion to shareholders.
“IHG had made it clear that the hotel was on the market,” analysts at Numis said. “This looks like a very acceptable price to us and the achieved price is some $150 million above our expectation.”
Numis said it would now anticipate a return to shareholders in the region of 1 billion pounds ($1.5 billion).
Supreme has paid a cash deposit to IHG of $94 million, with the remaining proceeds payable in cash on completion, expected in the second half of 2015.
IHG said it will retain a 37-year management contract on the hotel, with three 10-year extension rights, giving an expected contract length of 67 years.
Management fees payable to IHG are initially expected to be approximately $8 million per annum, increasing following a refurbishment Supreme has agreed to start in 2017.