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73 UK Hotels from InterContinental Hotels Group for CDN$2.3 Billion (USD 1.9 billion) |
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TORONTO/LONDON, U.K., March 10, 2005 - Toronto-based Realstar Group
announced today that in joint-venture with Lehman Bros. Real Estate Partners,
LP and GIC Real Estate Pte Ltd., the investment arm of the Government of
Singapore, it has entered into an agreement with InterContinental Hotels
Group PLC to purchase 73 hotels under the Crowne Plaza, Holiday Inn and
Express by Holiday Inn brands in the United Kingdom. Subject to EU
Merger clearance and shareholder approval, the sale is expected to close
in the second quarter of 2005 which will be sought at a special meeting
as soon as practicable.
LRG Acquisition Limited, the consortium entity, will pay a purchase price of CDN$2.3B (pnds stlg 1bn) before transaction costs; approximately CDN$2.2B (pnds stlg 960m) in cash and CDN$92.6M (pnds stlg 40m) deferred contingent cash consideration subject to certain performance targets being reached. The 73 hotels proposed to be sold (12,841 rooms) were placed on the market in September 2004 as part of IHG's ongoing asset disposal programme and have a net asset value of CDN$2.36B (pnds stlg 1,042m). They consist of 4 Crowne Plaza hotels, 68 Holiday Inn hotels and 1 Express by Holiday Inn hotel. 63 of the hotels will continue to be managed and branded by IHG under 20 year management contracts. IHG has two consecutive options to extend the contracts on the core properties for 5 years each, giving a total potential contract length of 30 years. For the balance of the portfolio, if LRG wishes to operate the hotel under an IHG brand after 2007, it must invest in the properties to comply with brand standards. "This acquisition represents a unique and significant opportunity for Realstar as these properties offered a tremendous value to us in terms of real estate and brand equity," said Jonas Prince, Chairman, Realstar Group. "It is not often that one finds the opportunity to purchase a comprehensive hotel portfolio with global brand recognition in one of the best-performing markets in the world. We are very pleased to be working in tandem with our joint venture partners and Intercontinental Hotels Group to ensure the continued success of these hotels." "We are very pleased to acquire this portfolio from InterContinental Hotels Group plc and look forward to working together with them and our joint venture partners, GIC Real Estate and Realstar Group," said Mark H. Newman, Managing Director of Lehman Brothers Real Estate Partners, LP. Dr. Seek Ngee Huat, President of GIC Real Estate Pte. Ltd. said, "We are delighted to be expanding our global hotel portfolio by participating in this venture with our partners Lehman Brothers Real Estate Partners and Realstar. The strength of the IHG brands will serve us in good stead as we continue to build this area of our company." Richard Solomons, Finance Director of IHG stated, "This is a significant step forward in the execution of our strategy and we have achieved attractive management contracts. These long term contracts give us excellent continued representation for Holiday Inn in the UK, one of our most important markets globally, and illustrate our strength as one of the leading hotel management companies in the world." LRG Acquisition Limited is a consortium comprised of
Realstar has been active in the hospitality sector since 1988 when it acquired the controlling interest in the 4-star Canadian hotel company, Delta Hotels & Resorts, then operating 14 hotels in Canada. Under the direction of Realstar Hotel Holdings, the chain grew to over 50 hotels and 10,000 employees at its peak to become Canada's largest privately owned hotel chain. The Delta brand was expanded globally into the US (Florida), the Caribbean (primarily Cuba) and South East Asia (Thailand, Vietnam, Philippines, Malaysia). Delta Hotels managed properties both on its own account and on behalf of corporate and institutional investors. Realstar Hotel Holdings successfully sold its interest in Delta in 1998. In 1992, Realstar Hotel Services Corp. acquired the master franchise rights for Canada to the Days Inn hotel chain. Under Realstar's stewardship this mid-market economy brand has grown from 10 hotels to 100 properties across Canada. Contributing to this expansion was Realstar's creation of a new construction prototype and interior design concept that became the springboard for numerous newly constructed Days hotels over the past four years. In 2003, Realstar entered into a strategic joint venture with international hotel group Accor SA of France. Under the terms of the agreement, Realstar has acquired the master franchise rights for the Novotel �, Motel 6 � and Studio 6 � hotel brands in Canada. Realstar plans to develop or franchise 60 new Accor hotels with a combined value of $500 million over the next 5 years. Lehman Bros. Real Estate is a $1.6 billion private equity fund that invests in North American and European properties. It is an arm of Lehman Bros., a New York City-based global investment bank. Headquartered in Singapore, GIC Real Estate Pte Ltd. is the real
estate
This announcement contains certain forward-looking statements as defined under US law (Section 21E of the Securities Exchange Act of 1934). |
Contact:
Realstar Group
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