InterContinental Sells Hong Kong Hotel for $938 Million

InterContinental Hotels Group Plc is selling the InterContinental Hong Kong to a group of investors including Pioneer Global Group for $938 million.

InterContinental Hotels will keep a 37-year management contract for the five-star hotel, which opened in 1980 as the Regent Hong Kong hotel and occupies a rare waterfront site in Kowloon with views of the skyline of Hong Kong island. The Denham, England-based company will make a $700-million pretax profit from the sale, according to a statement Friday.

The deal was led by Gaw Capital Partners, a Hong Kong-based real estate private-equity fund manager. The company has a track record for revitalizing iconic hotels, including the Roosevelt Hotel in Hollywood, site of the first Academy Awards in 1929, and the Strand Hotel in Yangon, built in 1901.

Gaw Capital has also advised Asian institutional investors on U.K. purchases, including Ping An Insurance’s acquisition of the Lloyd’s of London building in 2013. The company didn’t name the other investors in the group that’s buying the hotel.

Gaw Capital, founded in 2005 by Kenneth and Goodwin Gaw, will refurbish the 503-room hotel that boasts Michelin three starred restaurants including SPOON by Alain Ducasse and an outpost of Japanese chef Nobu Matsuhisa’s namesake restaurant. Work will begin in 2017 and is expected to last about 18 months.

As of the first quarter, Gaw Capital had raised equity of $4.26 billion and had $9.16 billion under management, according to the company’s website. Gaw has projects in London, Chicago, Seoul, Beijing, Ho Chi Minh City and Hong Kong.
Former Owner

The 17-story InterContinental Hong Kong was previously owned by Hong Kong billionaire Cheng Yu-tung’s New World Development Co., which sold the property in 2001 for 241 million pounds ($371 million).

InterContinental Hotels, which also owns the Holiday Inn and Crowne Plaza brands, has been divesting properties over the past decade as it focuses on operating properties rather than owning them. In December, the U.K. company accepted a 330 million-euro ($366 million) offer from Constellation Hotels Holding Ltd. for Le Grand hotel in Paris.

The company gained 3.1 percent in London trading Friday, the most since April 21. Pioneer shares were halted on Friday before the transaction was announced.

by Alfred Liu Source: www.bloomberg.com