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Qatari Diar, the real estate investment arm of the Qatari government, said on Wednesday that it is selling a 20% stake in the Centre International de Conferences in Paris to HongKong and Shanghai Hotels (HSH) for EUR 100 mln.

Hong Kong-listed HSH and Qatari Diar have agreed to re-develop the building as a 200-room hotel named Peninsula Paris. The hotel and ancillary facilities will be managed by a subsidiary of HSH for a period of 30 years with an automatic renewal of a further 20 years. The estimated re-development cost will be financed through a combination of commercial borrowings and the resources of Qatari Diar and HSH in proportion to their respective shareholdings.

Under the agreement, HSH will invest EUR 50 mln to redevelop the scheme. Construction work is scheduled to commence in the second quarter of 2009, following vacant possession of the building with completion expected by the end of the first quarter of 2012.

Michael Kadoorie, chairman of HSH, said, 'Paris is a strategic destination for the group and the Peninsula Paris most importantly will mark the company's first hotel in Europe.'

Located on Avenue Kleber in the centre of the city, the building was originally built and opened in 1908 as the Majestic Hotel. It is now used as an international conference centre by the French foreign affairs ministry.

Qatari Diar acquired the property in August 2007 from Qatar-based Barwa Real Estate for EUR 465 mln.