The FINANCIAL -- InterContinental Hotels Group PLC (IHG) announced the sale of the 383 room InterContinental San Francisco Mark Hopkins1 to a joint venture between affiliates of Woodridge Capital Partners and funds managed by Oaktree Capital Management L.P. for $120m gross cash proceeds. IHG will continue to manage the Hotel under a long-term management contract, according to IHG.
The Hotel first opened in 1926, and became an InterContinental in 1973. IHG acquired the lessee interest in 1983 and subsequently acquired the freehold in 2010. The new owners have agreed to invest approximately $20m to refurbish and reposition the hotel.
The sale is a continuation of IHG’s strategy to reduce the capital intensity of the business. Over the last 12 months IHG has agreed to dispose of three owned InterContinental hotels, with total gross proceeds of almost $830m. The disposal of InterContinental London Park Lane completed in May 2013 and the disposal of an 80% interest in InterContinental New York Barclay was announced in December 2013; this is expected to complete next month.
“Today’s announcement is yet another milestone for IHG, as we continue our asset light strategy. This demonstrates our ability to execute major asset deals and the enduring attractiveness of the InterContinental brand. We are delighted to have secured a long-term management contract on the Hotel with an experienced new owner and look forward to a successful partnership with them,” said Paul Edgecliffe-Johnson, Chief Financial Officer of IHG.
The Hotel generated revenues of $42m and EBIT of $6m in 2013 and had a net book value of $90m at 31 December 2013, according to IHG.