The firm is also seeking to sell a number of overseas hotels, including the Hilton Luxembourg and the Hilton Durban. As with the British hotels, Hilton is looking to continue running the assets under a sale/manage-back. The announcement came as Hilton confirmed completion of the sale of 15 UK hotels, including the Hilton London Olympia, in a euro 558-million ($659-million) sale/manage-back. The buyer of this package is the Managed Hotels Unit Trust, a vehicle set up by an Israeli investor. The trust is said to buy mainly on behalf of Israeli pension funds, which like the security offered by buildings with a strong income stream.
Under the terms of the sale/manage-back, Hilton will continue to run the hotels for an initial term of 30 years, with an option to extend. The 15 hotels that the trust is buying form part of a package of 18 hotels put up for sale by Hilton in July through CB Richard Ellis Hotels. Brian Wallace, Hilton's finance director and deputy chief executive, says that, taking into account the annual management fee, the company earned the equivalent of 12.8 times its forecast 2005 gross earnings.
As GlobeSt.com reported in October, the UK-based chain is already in separate talks with Hilton Hotels Corp., which has made an offer to buy the international division of the London-based company. The move would reunite the two groups after they split in 1964. Under the terms of the split, HHC could operate only in America, while Hilton Group operated around the world. The deal is not expected to be finalized until next year. A company source indicated that the talks between the UK and US companies would be unaffected by the newly minted sales.
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