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Indian Hotels Company, which owns the Taj Group of hotels, has sold its first US property, Taj Boston, for $125 million (₹839 crore) to pare its debt.
The 90-year-old hotel has been sold to a consortium comprising New England Development, Eastern Real Estate, Rockpoint Group, Lubert Adler and Highgate. However, Taj Hotels Resorts and Palaces will retain its brand presence in Taj Boston through a long-term management services agreement.
As at March-end 2016, the company had a consolidated gross debt of ₹4,781 crore. Taking into account the ₹395-crore liquidity on hand, the net debt stood at ₹4,386 crore.
Indian Hotels had acquired Taj Boston hotel in 2006 in order to have a presence in the US. However, the global recession took a toll on the hospitality industry worldwide, impacting the profitability of the hotel.
Earlier this year, the board of the hotel chain had permitted United Overseas Holdings, a wholly-owned subsidiary of the company in the US, to pursue the sale and disposal of the property in Boston to a third party at a base price not lower than $125 million.
“United Overseas Holdings effected on July 12 the divestment of Taj Boston Hotel through sale of the entire issued and outstanding LLC interests of IHMS (Boston) LLC held by UOH to AS Holding LLC, Boston for an aggregate consideration of $125 million,” Indian Hotels Company Ltd said in a regulatory filing.
Net sale proceeds will be utilised largely to retire debt, it added. Revenues and EBIDTA (earnings before interest, depreciation, taxes and amortisation) margins for Taj Boston have been sliding with net loss before tax at $7.3 million in 2015-16.
In a statement, Rakesh Sarna, MD and CEO, Taj Hotels, said: “The US remains an important market for us and we are committed to our presence which we have built over the past decade in key cities like New York, San Francisco and Boston.’’
Indian Hotels has also steadily been selling, at a loss, its holdings in luxury chain Belmond (formerly Orient Express Hotels) in the US. It has also been exiting management contracts in places such as Dubai and Morocco.
IHCL shares dipped 0.46 per cent to close at ₹129.90.
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