InterContinental Hotels Group (IHG) has signed a deal to divest the InterContinental San Francisco Mark Hopkins hotel to a joint venture between affiliates of Woodridge Capital Partners and funds managed by Oaktree Capital Management for $120m.
The deal also includes a long-term management contract, under which IHG will continue to manage the hotel.
First opened in 1926, the hotel was converted to an InterContinental property in 1973. IHG acquired the lessee interest in 1983 and purchased the freehold in 2010.
In 2013, the hotel generated revenues of $42m and EBIT of $6m, while it had a net book value of $90m by the end of the year.
Following the acquisition, the new owners have agreed to invest about $20m to upgrade and reposition the 383-room hotel.
The move is part of IHG’s plan to decrease the capital intensity of the business.
IHG chief financial officer Paul Edgecliffe-Johnson said the announcement is another milestone for the group as it continues its asset light strategy.
"This demonstrates our ability to execute major asset deals and the enduring attractiveness of the InterContinental brand," Edgecliffe-Johnson added.
"We are delighted to have secured a long-term management contract on the hotel with an experienced new owner and look forward to a successful partnership with them."
During the past year, IHG has agreed to sell three of its InterContinental hotels, which produce total gross proceeds of around $830m.
The company sold its InterContinental London Park Lane in May 2013 and divested about an 80% interest in InterContinental New York Barclay in December 2013.
Currently, IHG owns and operates 4,700 hotels and 687,000 guest rooms in around 100 countries and territories, while it has over 1,100 hotels in its development pipeline.
