IHG sells InterContinental Park Lane for £301.5m

InterContinental Hotels Group has sold the InterContinental London Park Lane for £301.5m.

The deal for the leasehold of the property sees the hotel purchased by Constellation Hotel (Opco) UK, which is an affiliate of Constellation Hotels Holding Limited, a Middle Eastern private investment group.

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 a year.

The hotel was opened in 1975 as a purpose built InterContinental and has been wholly owned by IHG since 1999. It generated revenues of £359m ($89m), EBITDA of £26m ($39m) and EBIT of £22m ($33m) in 2012.

A total of £61m ($93m*) generated from the sale will be used to provide security over UK pension liabilities which were previously secured against the hotel.

IHG indicated in November 2012 that the hotel could be sold and began to market it actively on 19 February

On completion of this disposal IHG will have sold 191 hotels for proceeds of £4b ($6.1bn). The InterContinental Park Lane was one of only 10 hotels still owned by IHG out of 4,600.

Richard Solomons, chief executive of IHG, said: "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."

The sale of the leasehold of the hotel was handled by Jones Lang LaSalle Hotels & Hospitality Group, while it is believed the freehold of the property was sold by CBRE Hotels on behalf of the Crown Estate for around an additional £100m.