Ladbroke, the hotels and casinos group which is withdrawing from the property market, made a further disposal yesterday when its United States property subsidiary sold the Bay Colony Corporate Center in Boston for $163m. The Boston site represents around a fifth of Ladbroke's remaining property holding.
The sale will fuel speculation that the company will make a move for the Hilton hotels business in the US before the year is out. Ladbroke already owns the rights to the Hilton name outside the US and has admitted that it is in talks about the business.
The Boston property sale, together with the pounds 290m earned from the sale of Texas Homecare to Sainsbury earlier this year, will reduce Ladbroke's borrowings to less than pounds 1bn and give the group the financial muscle to finance a Hilton deal.
According to analysts, Hilton's hotels subsidiary has a price tag of around pounds 2.6bn, which would make an outright Ladbroke bid unlikely. Analysts expect Ladbroke to try to secure the rights to manage the hotels via a joint venture with a real estate investor in the US.
Smith Barney, the New York securities house, has been working on a strategic plan for Hilton Corp since before Christmas. The casinos business, mainly based around Las Vegas, is expected to fetch around pounds 1.6bn if it is spun off.
The group has 291 hotels, of which just six are outside the Americas.
Ladbroke's Bay Colony property site in Boston consists of three large office buildings set in 168 acres of woodland. Net rental income from the property was $8.6m.
Ladbroke has received $40m of the sale price immediately with a further $75m payable by December. The balance of $48m does not have to be paid until December 1998.
Ladbroke's shares finished 2p higher at 184p.Reuse content