InterContinental Hotels Group has finally done it. The hotel operator has sold a majority stake in its New York Barclay hotel to Qatar's Constellation Hotel Holdings for $240 million. Constellation will hold an 80-percent stake in the hotel, located adjacent to the Waldorf-Astoria in midtown Manhattan.
Constellation will reportedly spend money to refurbish the hotel, something the property is in desparate need of.
News of the sale is not a surprise. IHG had reportedly taken the property off the market this year after a deal fell through. In April, Richard Solomons, CEO of IHG, said, "We will go back to the market this year. Demand for prime real estate assets in major cities is returning, mostly from non-U.S. real estate investment trusts, sovereign wealth funds and wealthy individuals. We have taken the time to create full refurbishment plans. What makes it attractive is the opportunity to enhance the asset, do great refurbishment and create value that way."
At the time he said the renovation would cost around $100 million. The property was first put up for sale in 2011.
The transaction is expected to be completed in the first quarter of 2014.
IHG has secured a 30-year management contract on the hotel, commencing in 2014, with two ten year extension rights at IHG’s discretion, giving an expected contract length of 50 years.
"Constellation Barclay Holding US (an affiliate of the Qatari-based investor), and IHG have agreed to invest through the joint venture in a significant refurbishment, repositioning and extension of the hotel," a statement said. "This is expected to commence in 2014 and will take place over a period of approximately 18 months."
The hotel opened in 1926 and has been wholly owned by IHG since 1998. In 2012 the hotel, which has 685 rooms, generated revenues of $75 million.
"Thursday's announcement demonstrates the enduring strength of the InterContinental brand and deepens IHG's relationship with Constellation Hotels, a highly respected owner," Solomons said.
This isn't the first time IHG has worked out a deal with Constellation. Back in March, IHG sold the 447-room London Park Lane Hotel to Constellation for a reported $457 million.