The FINANCIAL -- Constellation Barclay Holding US, LLC, which is an affiliate of Constellation Hotels Holding Limited, has agreed to acquire an 80% interest in a joint venture with InterContinental Hotels Group to own and refurbish the InterContinental New York Barclay (the “Hotel”), according to IHG.
The 80% interest will be acquired for gross cash proceeds of $240m, which values the Hotel at $300m prior to refurbishment. IHG will hold the remaining 20% interest.
IHG has secured a 30 year management contract on the Hotel, commencing in 2014, with two ten year extension rights at IHG’s discretion, giving an expected contract length of 50 years. Constellation Barclay Holding US, LLC and IHG have agreed to invest through the joint venture in a significant refurbishment, repositioning and extension of the Hotel. This is expected to commence in 2014 and will take place over a period of approximately 18 months, according to IHG.
The Hotel was opened in 1926 and the freehold has been wholly owned by IHG since 1998. In 2012 the Hotel generated revenues of $75m and EBIT of $16m.
The transaction is expected to complete in the first quarter of 2014, subject to the satisfaction of certain standard conditions. The proceeds will be used for general corporate purposes.
“InterContinental New York Barclay is an iconic hotel in one of the world’s iconic cities. Today’s announcement demonstrates the enduring strength of the InterContinental brand and deepens IHG’s relationship with Constellation Hotels, a highly respected owner. We are delighted to be working in partnership with them to manage and extensively refurbish and reposition the hotel. The result, in what is a prime location in New York, will be a fantastic InterContinental brand presence for IHG in one of the world’s leading hotel markets,” said Richard Solomons, Chief Executive of IHG.