IHG sells 24 hotels to a subsidiary of Westbridge

InterContinental Hotels Group PLC has sold a portfolio of 24 hotels to a subsidiary of Westbridge Hospitality Fund LP.

The portfolio has been sold for €352m (approximately £240m), marginally above net asset value.

Proceeds to IHG in cash and debt assumption are €345.2m (before transaction costs), with the balance of €6.8m relating to third party minority interests, as per the information available.

Andrew Cosslett, chief executive, IHG, said that the deal is another significant step in the transformation of IHG.

“As we focus on managing and franchising hotels, it is essential that we continue to develop our relationships with key partners on a global basis,” said Cosslett.

The hotels have been sold to Westbridge with 15-year franchise contracts. Normalised franchise fees are expected to be approximately €4m per annum. The hotels are located in Continental Europe and operate under the Crowne Plaza, Holiday Inn, and Express by Holiday Inn brands. The transaction is expected to complete in the second quarter of 2006, stated a release.

The hotels generated revenues of €140m, EBITDA of €28m and EBIT of €11m in 2005.

“These disposals represent a continuation of IHG’s strategy to grow its managed and franchised business and reduce asset ownership. Since separation in April 2003, IHG has disposed of, or is in the process of disposing of, 175 hotels with a net asset value of more than £2.8bn. Aggregate proceeds received to date have been above net asset value. IHG has announced the return of £2.75bn to shareholders, of which £2.0bn has already been completed. Proceeds received from the disposal will be used for investment, returns to shareholders, or managing IHG’s debt position,” added the company.