InterContinental Hotels Group (IHG) yesterday said it has agreed to sell InterContinental Hong Kong to a consortium of investors for US$938 million and might 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 Harbour.
It is being sold to Supreme Key Ltd, a consortium of investors advised and managed by Gaw Capital Partners (基匯資本), a 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 nearly US$8 billion, helping it to return more than US$10 billion to shareholders.
“IHG had made it clear that the hotel was on the market,” Numis Securities analysts said. “This looks like a very acceptable price to us and the achieved price is some US$150 million above our expectation.”
Numis said it would now anticipate a return to shareholders in the region of ￡1 billion (US$1.5 billion).
Supreme has paid a cash deposit to IHG of US$94 million, with the remaining proceeds payable in cash on completion, expected in the second half of this year.
IHG said it would retain a 37-year management contract on the hotel, with three 10-year extension rights, for an expected contract length of 67 years.
Management fees payable to IHG are expected to be about US$8 million per year, increasing following a refurbishment Supreme has agreed to start in 2017.
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