By Paul Sandle
LONDON (Reuters) -London's iconic BT Tower is set to become a luxury hotel after the owner BT Group (LON:BT) agreed to sell the 177-metre building in the capital's West End to MCR Hotels for 275 million pounds ($347 million).
The tower, a symbol of London's 1960s post-war revival with a rotating restaurant on its 34th floor, was the city's tallest building for 16 years until it was overtaken by a skyscraper in the City of London financial district in 1980.
Opened by Prime Minister Harold Wilson in 1965, its central role in communications has faded, and its microwave aerials were removed more than a decade ago when they were no longer needed to connect London to the rest of the country.
BT's Property Director Brent Mathews said the tower, which sits at the heart of the capital, had played a vital role in carrying the nation's calls, messages and TV signals.
"This deal with MCR will enable BT Tower to take on a new purpose, preserving this iconic building for decades to come," he said.
Tyler Morse, CEO and owner of MCR Hotels, said the conversion to a hotel would open the building's doors "for generations to enjoy".
The building, which has listed protection limiting architectural changes, was widely known as Post Office Tower from its inception until 1984, when British Telecom was privatised.
It closed to the public after a bomb exploded at the site in 1971, which was claimed to be have been planted by a far-left anarchist collective.
In recent years it has been better known for its 360-degree LED display that broadcasts messages about major events, such as the birth of royal babies and sporting victories.
MCR Hotels, the third-largest hotel operator in the United States, has experience in converting famous buildings to hotels, notably TWA's terminal designed by Eero Saarinen at New York's JFK Airport.
It said it would partner with London-based Heatherwick Studio on BT Tower.
London is seeing a boom in five-star hotels, including a multimillion-pound renovation of Claridges, and the opening of Peninsula London and Raffles London at The OWO last year.
As a hotel, the BT Tower will also compete with the likes of the Shangri-La in The Shard, now London's tallest building.
Mat Oakley, director in commercial research at property services firm Savills (LON:SVS), said the deal showed "that interesting and well-located buildings in London have potential for rejuvenation and repurposing".
BT's legal advisers on the sale were Addleshaw Goddard, while MCR Hotels was advised by Herbert Smith Freehills.
($1 = 0.7925 pounds)