13th Jul 2006 07:01
InterContinental Hotels Group PLC13 July 2006 13 July 2006 INTERCONTINENTAL HOTELS GROUP SALE OF SEVEN HOTELS IN CONTINENTAL EUROPE FOR €634MILLION (£440m) InterContinental Hotels Group PLC ("IHG") today announces it has agreed to sella portfolio of seven InterContinental branded hotels (2,537 rooms) located inContinental Europe to the Morgan Stanley Real Estate Funds ("MSREF"). IHGpreviously announced in January 2006 that these hotels had been put on themarket. IHG has retained 30 year management contracts on the hotels, with two 10 yearrenewals at IHG's discretion giving a total potential contract length of 50years. These long term contracts ensure the representation of theInterContinental brand in these important locations. IHG and MSREF haveseparately reached preliminary agreement on converting further hotels comprisingup to 1,000 rooms to IHG's brands, and are exploring other opportunities whereIHG's brand family complements MSREF's asset portfolio. The portfolio has been sold for €634m (£440m(1)) in cash before transactioncosts, approximately €80m above net book value of approximately €550m, with nomaterial tax charge arising. In addition, MSREF has agreed to make capitalinvestments in the portfolio for approximately €60m, including implementing newbrand initiatives and adding further facilities to these prestigious hotels. The transaction is expected to complete in the third quarter of 2006, subject tothe satisfaction of certain conditions including EU merger clearance. Proceedsreceived from the disposal will be used for investment, returns to shareholders,and managing IHG's level of debt. In 2005, these seven hotels generated revenues of €185m, EBITDA of €42m and EBITof €23m before management fees. Normalised management fees from the managementcontracts are expected to be approximately €10m per annum going forward. On completion of this transaction, IHG will have sold 175 hotels with a netasset value of more than £2.8bn since separation from Six Continents in April2003. IHG has retained over 90% of sold properties under its brand flags, aspart of its strategy to grow its managed and franchised business and reduceasset ownership. Aggregate proceeds received to date have been above net assetvalue. IHG has announced the return of £2.75bn to shareholders, of which £2.6bnhas already been completed. Andrew Cosslett, Chief Executive of IHG, commented: "This deal is a significant step for IHG as we near the conclusion of our assetdisposal programme. MSREF is a highly respected real estate investor and will bea strong business partner. We look forward to working with them and developingour relationship. Looking ahead, IHG is fully focused on its growth target ofadding 50,000 to 60,000 rooms to our portfolio on a net and organic basis by theend of 2008." Struan Robertson, Managing Director, Head of Morgan Stanley Real Estate Europe &Middle East, commented: "With this transaction MSREF is extending its hotel investment business intoEurope. We are pleased to be working with InterContinental Hotels Group, and theprestigious InterContinental brand, and look forward to expanding ourinvolvement with them around the world. At the same time we are establishing aspecialised hotel asset management platform to ensure the highest qualityinteraction with our hotel operating partners across the region." For further information, please contact:Investor Relations (Paul Edgecliffe-Johnson): +44 (0) 1753 410 176 Media Enquiries (Leslie McGibbon): +44 (0) 1753 410 425 +44 (0) 7808 094 471 Transaction details: 1. The purchasing entity is a company ultimately controlled by MSREF. 2. The net book value of the assets sold was approximately €550m. 3. No material tax charge arises as a result of the transaction. A deferred taxprovision of approximately €120m in relation to the assets will be released oncompletion. Disposals announced today: 2005 •mRevenue 185EBITDA* 42EBIT* 23 *Before management fees Hotel RoomsInterContinental Amstel Amsterdam 79InterContinental Budapest 398InterContinental Carlton Cannes 338InterContinental De La Ville Rome 192InterContinental Frankfurt 770InterContinental Madrid 307InterContinental Vienna 453Total 2,537 Note to Editors: InterContinental Hotels Group PLC of the United Kingdom (LON:IHG, NYSE:IHG(ADRs)) is the world's largest hotel group by number of rooms. InterContinentalHotels Group owns, manages, leases or franchises, through various subsidiaries,over 3,600 hotels and 537,000 guest rooms in nearly 100 countries andterritories around the world. The Group owns a portfolio of well recognised andrespected hotel brands including InterContinental(R) Hotels & Resorts, CrownePlaza(R) Hotels & Resorts, Holiday Inn(R) Hotels and Resorts, Holiday InnExpress(R), Staybridge Suites(R), Candlewood Suites(R) and Hotel IndigoTM, andalso manages the world's largest hotel loyalty programme, Priority Club(R)Rewards. InterContinental Hotels Group offers information and online reservations for allits hotel brands at www.ichotelsgroup.com and information for the Priority ClubRewards programme at www.priorityclub.com. For the latest news from InterContinental Hotels Group, visit our online PressOffice at www.ihgplc.com/media. About Morgan Stanley Real Estate Morgan Stanley Real Estate is comprised of three major global businesses:Investing, Banking, and Lending. Since 1991, Morgan Stanley has acquired $87.7billion of real estate assets worldwide and currently manages $50.9 billion inreal estate assets on behalf of its clients. In addition, Morgan Stanley RealEstate provides a complete range of market-leading investment banking servicesto its clients including advice on strategy, mergers, acquisitions andrestructurings, as well as underwriting public and private debt and equityfinancings. Morgan Stanley is also a global leader in real estate lending and,using its own capital, originated upwards of $26 billion in commercial mortgagesin 2005. For more information about Morgan Stanley Real Estate, go towww.morganstanley.com/realestate. Morgan Stanley (NYSE: MS) is a global financial services firm and a marketleader in securities, investment management, and credit services. With more than600 offices in 30 countries, Morgan Stanley connects people, ideas and capitalto help clients achieve their financial aspirations. -------------------------- (1) Exchange rate as of 10 July 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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