Hilton Hotels Corporation has sold a portfolio of 10 European hotels to a fund managed by Morgan Stanley Real Estate Funds (MSREF) for €566m (£386m).
Hilton and MSREF have agreed a long-term management contract on five of the 10 hotels, including the Hiltons in Düsseldorf, Dresden, Paris Charles de Gaulle, Strasbourg and Zurich.
MSREF has agreed to make an immediate investment of €18m (£12.2m) in these five hotels. Of the remaining hotels, long term management agreements are expected to be established on the Hilton hotels in Brussels, Barcelona and Luxembourg subject to Hilton and Morgan Stanley Real Estate agreeing to capital plans.
The Los Zocos Club Resort in the Canary Islands is being sold without an ongoing contract, and MSREF and Hilton will evaluate the future intent for the Hilton Weimar in Germany. Hilton will use the proceeds from the sale will be used to pay down debt.
The sale of seven of the hotels is subject to a number of conditions including clearance from the European Union regulators, but is expected to be completed by the end of June 2007.
The sales of three hotels – Paris Charles de Gaulle, Barcelona and Zurich – are also subject to certain conditions and require further legal and statutory discussions and approvals. Sale of these three hotels is anticipated to be taking place in the third quarter of 2007. Hilton was advised by Banc of America Securities.
Hilton Hotels has also today completed the sale of the 132 hotels in Scandinavia chain to EQT for €833m (£568m).