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Hilton Signs Agreement to Sell up to 10 Hotels in Continental Europe
to Morgan Stanley Real Estate for Approximately US$ $770 Million
 BEVERLY HILLS, Calif. & LONDON - April 26, 2007 - Hilton Hotels Corporation (NYSE:HLT) today announced agreement to sell up to 10 hotels (approx. 3,330 rooms) to a fund managed by Morgan Stanley Real Estate for approximately €566 million (or approximately US$770 million). Assuming completion of the sale of all 10 hotels, net proceeds after property level debt repayment (approx. €41 million), taxes and transaction costs are expected to be approximately €450 million. Proceeds from the sale will be used to pay down debt.

Based on trailing 12-month earnings from the 10 hotels before interest, taxes, depreciation and amortization (EBITDA), the sale price represents an EBITDA multiple of approximately 15.2x.

Hilton and Morgan Stanley Real Estate have agreed to long-term management contracts on five of the 10 hotels, including the Hiltons in Düsseldorf, Dresden, Paris Charles de Gaulle, Strasbourg and Zurich. Morgan Stanley Real Estate has agreed to make an extensive and immediate investment of approximately €18 million in these five hotels. Of the remaining hotels, long term management agreements are expected to be established on the Hilton hotels in Brussels, Barcelona and Luxembourg subject to Hilton and Morgan Stanley Real Estate agreeing to capital plans. For the remaining two hotels, the Los Zocos Club Resort (an unbranded all-inclusive resort in the Canary Islands) is being sold without an ongoing contract, and Morgan Stanley Real Estate and Hilton will evaluate the future intent for the Hilton Weimar in Germany where Hilton branding will remain in place for a short term period pending such evaluation.
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Hilton Dresden
Location: An der Frauenkirche 5 (City Centre)
Rooms: 333
 
Hilton Düsseldorf
Location: Georg - Glock Strasse 20 (City Centre)
Rooms: 375
 
Hilton Weimar
Location: Belvederer Allee 25 (City Centre)
Rooms: 294
 
Hilton Zürich Airport
Location: Hohenbuehlstrasse 10 (Airport)
Rooms: 323
 
Hilton Charles de Gaulle
Location: Roissypôle, Rue de Rome (Airport)
Rooms: 385
Hilton Strasbourg
Location: Avenue Herrenschmidt (City Centre)
Rooms: 243
 
Hilton Luxembourg
Location: 12 Rue Jean Engling (City Centre)
Rooms: 337
 
Hilton Brussels
Location: 38 Boulevard de Waterloo (City Centre)
Rooms: 431
 
Hilton Barcelona
Location: Avenida Diagonal 589-591 (City Centre)
Rooms: 286
 
Los Zocos Club Resort
Location: Avda Islas Canarias 5 (Resort)
Rooms: 324
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The sale of seven of the hotels is subject to a number of conditions including clearance from the European Union regulators, but is expected to be completed by the end of June 2007. The sales of the remaining three hotels (Paris Charles de Gaulle, Barcelona and Zurich) are also subject to certain conditions and require further legal and statutory discussions and approvals. Sale of these three hotels is anticipated to be taking place in the third quarter, 2007.

On completion of these transactions, Hilton will have sold over $3 billion of assets that it obtained in the acquisition of Hilton International in late February 2006, and over $4.5 billion of assets will have been sold since the company began its disposition program in 2005.

Robert M. La Forgia, Executive Vice President and Chief Financial Officer of Hilton Hotels Corporation, commented on the proposed sale:

"This transaction is a significant step for Hilton as we continue to focus on our strategy of growing our managed and franchise business, while reducing asset ownership and strengthening our balance sheet.

"Morgan Stanley Real Estate is a highly respected real estate investor and an important business partner and currently owns or has an interest in 13 Hilton family hotels. This transaction builds significantly on this relationship and provides a platform for continued growth of our brands as we look expand our reach globally.”

Hilton was advised by Banc of America Securities Limited. Morgan Stanley Real Estate was advised by Morgan Stanley.

Note: This press release contains “forward-looking statements” within the meaning of federal securities law, including statements concerning business strategies and their intended results, and similar statements concerning anticipated future events and expectations that are not historical facts. The forward-looking statements in this press release are subject to numerous risks and uncertainties, including the effects of economic conditions; supply and demand changes for hotel rooms; competitive conditions in the lodging industry, relationships with clients and property owners; the impact of government regulations; changes in foreign currency exchange rates; acquisition and disposition of assets; and the availability of capital to finance growth, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Although we believe the expectations reflected in these forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained and caution you not to place undue reliance on such statements. We undertake no obligation to publicly update or revise any forward-looking statements to reflect current or future events or circumstances.

About Morgan Stanley Real Estate
Morgan Stanley Real Estate is comprised of three major global businesses: Investing, Banking and Lending. Since 1991, Morgan Stanley has acquired $113.5 billion of real estate assets worldwide and currently manages $72.8 billion in real estate assets on behalf of its clients. In addition, Morgan Stanley Real Estate provides a complete range of market-leading investment banking services to its clients, including advice on strategy, mergers, acquisitions and restructurings, as well as underwriting public and private debt and equity financings. Morgan Stanley is also a global leader in real estate lending offering approximately $156.0 billion of CMBS through the capital markets since 1997, including $35.5 billion in 2006. For more information about Morgan Stanley Real Estate, go to www.morganstanley.com/realestate. Morgan Stanley (NYSE:MS) is a leading global financial services firm providing a wide range of investment banking, securities, investment management, wealth management and credit services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 600 offices in 31 countries. For further information about Morgan Stanley, please visit www.morganstanley.com.

About Hilton Hotels Corporation
Hilton Hotels Corporation (NYSE:HLT) is the leading global hospitality company, with more than 2,800 hotels and 480,000 rooms in 76 countries and territories, including 100,000 team members worldwide.The company owns, manages or franchises a hotel portfolio of some of the best known and highly regarded brands, including Hilton®, Conrad®, Doubletree®, Embassy Suites Hotels®, Hampton Inn®, Hampton Inn & Suites®, Hilton Garden Inn®, Hilton Grand Vacations™, Homewood Suites by Hilton® and The Waldorf=Astoria Collection®.

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Contact:

Hilton International Operations
Linda Bain, VP Communications
(UK) +44 (0)207 856 8293
linda.bain@hilton.com

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Also See: Hilton May Sale All or Part of the Scandic Brand, Representing 130 Hotels; Also Names 10 Hilton Hotels for Sale in Europe / August 2006
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