PPHE Hotel Group to repurchase Park Plaza London Waterloo freehold interest

(Sharecast News) - Hospitality real estate firm PPHE Hotel Group said on Monday that it has entered into an agreement to repurchase its freehold interest in Park Plaza London Waterloo. In June 2017, following PPHE's development and opening of the 494-room Park Plaza London Waterloo hotel, the firm entered into an initial sale and leaseback transaction whereby it sold its interest in the hotel for £161.5m and entered into a 199-year lease, subject to an initial annual rent of £5.6m with future annual inflation adjustments. PPHE noted that the Park Plaza's annual rental obligation was currently £7.3m, rising in line with RPI.

The FTSE 250-listed firm stated the freehold acquisition was for a total consideration of £147.9m, of which £136.5m was intended to be funded by a new debt facility, which it expects to finalise prior to completion and will be secured on the freehold and long leasehold interest in the property.

PPHE added that the remaining balance will be settled from its existing cash resources. The transaction was expected to close "in the coming months".

Co-chief executive Greg Hegarty said: "This transaction is another excellent illustration of PPHE's approach to capital allocation and capital recycling. We continuously assess and examine opportunities across the portfolio to help drive returns.

"At the time, the initial sale and leaseback represented an attractive opportunity to release capital from this asset to reinvest in our broader development pipeline. Similarly, the purchase of this freehold interest is a good use of capital, protecting the group from future rental uplifts, whilst increasing the freehold exposure in our portfolio. As freehold owner, we will have increased strategic optionality on refurbishment and development, as well as benefiting from potentially better financing terms and full asset value capture."

As of 0940 GMT, PPHE shares were down 5.60%% at 1,888p.

Reporting by Iain Gilbert at Sharecast.com