Qataris ‘pay $605m for luxury London hotel’
London, March 28, 2013
Qatari-backed investor Constellation Hotels has bought the InterContinental London Park Lane hotel in a deal worth about 400 million pounds ($605 million), a source close to the transaction told Reuters.
Constellation paid 301.5 million pounds for InterContinental Hotel Group's (IHG) 57-year lease on the 447-bedroom property close to Hyde Park, IHG said on Thursday.
In a separate deal, Constellation paid about 100 million pounds for the freehold, which was owned by the Crown Estate, the property company that controls the assets of Queen Elizabeth II, the source said.
The 301.5 million pound price tag is 62 percent above the hotel's book value, showing the strength of demand for trophy London real estate and five-star hotels in particular.
The disposal fits with IHG's policy of selling real estate to free up cash, and the company's shares were up more than 3 percent at 2,012 pence at 1043 GMT, making it one of the top risers on the FTSE 100 index.
Under the terms of the deal, it will manage the hotel for up to 60 years for an annual fee of about 4 million pounds.
There were about six bidders for the IHG property, said George Nicholas at selling agent Jones Lang LaSalle. "They included sovereign wealth funds and private investors from Asia and the Middle East. Five-star London hotels rarely come to market," he said.
Overseas investors have parked billions of pounds in London real estate during the global financial crisis, drawn to the relative safety of investing in the city's best properties.
Qatar has been particularly active, investing in the Shard skyscraper, Harrods department store and athlete's village in the Olympic Park in east London.
The 3.5 billion euros ($4.5 billion) it spent on European real estate in the 12 months to mid-August 2012 was the equivalent of six weeks' revenue from the country's liquefied natural gas exports, according to Reuters calculations. – Reuters