InterContinental Hong Kong’s ownership interest sells for US$938 million

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InterContinental Hotels Group (IHG) has agreed to sell its ownership interest in InterContinental Hong Kong to Supreme Key Limited, a consortium of investors advised and managed by Gaw Capital Partners for a gross purchase price of US$938 million. Gaw Capital Partners has paid a cash deposit to IHG of $94m, with the remaining proceeds payable in cash on completion.

Gaw Capital Partners has made a further commitment to invest in a significant refurbishment of the hotel. This is expected to commence in 2017 and will take place over a period of approximately 18 months.

IHG will retain a 37-year management contract on the hotel, with three 10-year extension rights, giving an expected contract length of 67 years. Management fees payable to IHG are initially expected to be approximately $8m per annum, increasing following the refurbishment.

The transaction is scheduled for completion in the second half of 2015. A decision on a return of funds to shareholders from these proceeds, alongside those received from the sale of InterContinental Paris – Le Grand, will be announced at preliminary results in February 2016.

Richard Solomons, Chief Executive Officer of IHG commented: “The InterContinental Hong Kong is an exceptional property and an iconic hotel in our portfolio. This sale highlights the enduring appeal of InterContinental as one of the world’s leading luxury hotel brands. We are very pleased to be working closely with a highly regarded hotel investor that will be a great partner for IHG and with whom we look forward to building a successful long-term relationship.”

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