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In a bid to reduce company debt, Hilton has completed on its sale of the Scandic hotel chain to EQT for ”833m ($1.1bn) and will sell a further ten properties to a fund managed by Morgan Stanley Real Estate for approximately ”566m.
Assuming completion of these sales, net proceeds after property level debt repayment, taxes and transaction costs, is expected to be ”450m. Net profit from the sale of the 132-strong Scandic hotel chain is expected to be ”765m.
Included in the sale of the latest ten properties are hotels in Dusseldorf, Dresden, Paris Charles de Gaulle, Strasbourg and Zurich, all of which will continue to operate with the Hilton name under long-term management contracts.
Long-term contracts have yet to be agreed on properties in Brussels, Barcelona and Luxembourg and the remaining two hotels ” Los Zocos Club Resort in the Canary Islands and the Hilton Weimar in Germany ” have been sold without ongoing management contracts, although the Hilton branding will continue in the German property for a short-term period.
On completion of these sales, which are subject to various approvals by the European Union regulators, Hilton will have sold more than $3bn of assets that it obtained from the acquisition of Hilton International in February 2006 and a total of $4.5bn since it began a disposition programme in 2005.
”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,” said Hilton Hotels Corporation executive vice president and chief financial officer, Robert La Forgia.