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IHG Sells InterContinental London Park Lane

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InterContinental Hotels Group has agreed to sell the 477-room InterContinental London Park Lane to Constellation Hotel (Opco) UK S.A., which is an affiliate of Constellation Hotels Holding Limited, a Middle Eastern private investment group.

IHGs leasehold interest in the hotel has been sold for gross cash proceeds of 301.5m, 62% above 31 December 2012 net book value.

IHG has secured a 30 year management contract on the hotel, with three ten year extension rights at IHGs discretion, giving an expected contract length of 60 years. Management fees are expected to be approximately 4m per annum.

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

The transaction is expected to be completed in the second quarter of 2013, subject to the satisfaction of certain standard conditions. The proceeds will be used for general corporate purposes, with 61m used to provide security over UK pension liabilities which were previously secured against the hotel.

IHG indicated in November 2012 that the hotel would be the next major asset considered for sale and announced on 19 February that the hotel was being actively marketed for disposal. Since becoming a standalone company in April 2003, on completion of this disposal IHG will have sold 191 hotels for proceeds of $6.1bn.

Richard Solomons, Chief Executive of IHG, said that the transaction, 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.

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