PPHE unlocks £113.7 million of equity through a joint venture with Clal Insurance

Thu, 24th Jun 2021

PPHE Hotel Group has agreed terms to enter into a joint venture with Clal Insurance, in respect of two of the group's prime London assets. PPHE will receive a cash consideration of £113.7 million as part of this transaction, enabling the group to pursue new opportunities to accelerate growth. Boris Ivesha, president and CEO of PPHE Hotel Group, said: 'The agreement values its assets at the group's latest EPRA NAV level and the proceeds will enable the group to pursue new growth opportunities as the pandemic period subsides.' On completion of the transaction, Clal will become a minority partner and owner of 49% of the shares in one joint venture company (JVCo) holding indirectly the real estate and operations of both the 646-room Park Plaza London Riverbank and the 343-room art'otel London Hoxton development project, which is scheduled to open in 2024. The group remains the majority owner of the hotels by retaining a 51% holding in JVCo and through its management company has secured a 20-year hotel management agreement in respect of both hotels. The total price paid by Clal in connection with the transaction amounts to £113.7 million in cash and a further cash injection of £12.1 million to fund their portion of the remaining equity commitments of the art'otel London Hoxton development project. This consideration, taking into account existing bank debt and remaining development costs, is based on a £263 million property valuation for Riverbank and an all in development budget cost, which includes the fair value of the land, of £279.3 million for Hoxton. Clal will also be granted five million share appreciation rights to have a value upside if the gap between the group's latest reported EPRA NAV and its' current market price narrows over the maturity period. Story provided by StockMarketWire.com

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