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RNS Number : 9241C
PPHE Hotel Group Limited
24 June 2021
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014, as it
forms part of domestic law by virtue of The European Union
(Withdrawal) Act 2018.
On publication of this information such information shall be
considered to be in the public domain.
24 June 2021
PPHE Hotel Group Limited
(the "Group" or the "Company")
PPHE unlocks GBP113.7 million of equity through a joint venture
with Clal Insurance
PPHE Hotel Group, the international hospitality real estate
group which develops, owns and operates hotels and resorts, is
pleased to announce that it has agreed terms to enter into a joint
venture with Clal Insurance ("Clal"), one of Israel's leading
insurance and long-term savings companies, in respect of two of the
Group's prime London assets. PPHE will receive a cash consideration
of GBP113.7 million as part of this transaction, enabling the Group
to pursue new opportunities to accelerate growth.
Boris Ivesha, President & CEO of PPHE Hotel Group, comments:
"We are excited to partner with Clal on Park Plaza London Riverbank
and our art'otel london hoxton development, which reflects our
mutual confidence in the strength of the London hospitality real
estate market. 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 ("Riverbank") and the
343-room art'otel london hoxton development project ("Hoxton"),
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 GBP113.7 million in cash and a further cash injection of
GBP12.1 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 GBP263 million property valuation
for Riverbank and an all in development budget cost, which includes
the fair value of the land, of GBP279.3 million for Hoxton. A
further breakdown of the purchase price is provided in the table
below.
Clal will also be granted 5 million share appreciation rights
('SAR') 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. The SAR has a 7-year maturity with a strike
price of GBP16 per share and the upside is capped at GBP21 per
share. Settlement of the SAR will be in either Company shares or
cash. As an example, should the market price of the Company's
shares increase by 27% from its current price of GBP16.50 to
GBP21.00, Clal will be entitled to approximately 1.2 million shares
(2.8% of the currently outstanding share capital), or GBP25
million.
The transaction largely reflects the values that have been
included in the Group's EPRA NAV per 31 December 2020 of GBP22.08
per share.
Total price GBPm
Market value Riverbank 263.0
--------
Market value Hoxton land and remaining development
cost 279.3
--------
542.3
--------
Bank debt (146.0)
--------
Remaining development costs Hoxton (166.2)
--------
Working capital adjustments 2.0
--------
Equity value 232.1
--------
CLAL's investment in connection with the
transaction (49%) 113.7
--------
Remaining equity commitment GBPm
Remaining development costs Hoxton 166.2
--------
Undrawn part of the GBP180m construction
facility (141.5)
--------
Remaining equity commitment Hoxton 24.7
--------
Cash injection CLAL (49% of equity commitment) 12.1
--------
The transaction will result in an increase of the Group's cash
position of GBP113.7 million. The Group is currently analysing the
accounting treatment for the transaction and will report this in
its' interim financial statements. In 2020, Riverbank and Hoxton
contributed a GBP10.7 million loss to the consolidated loss of the
Group. The book value of the properties as at 31 December 2020
amounted to GBP271.2 million.
The joint venture arrangements between the Group and Clal
contain customary exit provisions which include a right for Clal to
require a sale of either or both of the companies which own the
hotels following 7 years from completion or earlier in a change of
control of PPHE and certain events of default. If triggered, such
provisions afford the Group a pre-emption right in respect of such
companies.
The Group has also given certain guarantees to Clal regarding
completion of the art'otel london hoxton development project.
PPHE's obligations under all of the above arrangements are, to the
extent they are not within PPHE's sole discretion subject to a cap
which is below the threshold for a class 1 transaction (as defined
by the UK Financial Conduct Authority's Listing Rules).
The transaction is expected to complete on or before 30 June
2021.
The transaction constitutes a Class 2 transaction for the
purposes of the UK Financial Conduct Authority's Listing Rules,
and, as such does not require PPHE shareholders' approval.
Enquiries
PPHE Hotel Group Limited
Daniel Kos, Chief Financial Officer and Executive Tel: +31 (0)20 717
Director 8600
Inbar Zilberman, Chief Corporate & Legal Officer
Robert Henke, Executive Vice President of Commercial
Affairs
Hudson Sandler
Wendy Baker/ Lucy Wollam Tel: +44 (0)20 7796
4133
pphe@hudsonsandler.com
Notes to Editors
PPHE Hotel Group is an international hospitality real estate
company, with a GBP1.7 billion portfolio, valued as at December
2020 by Savills and Zagreb nekretnine Ltd (ZANE), of primarily
prime freehold and long leasehold assets in Europe.
Through its subsidiaries, jointly controlled entities and
associates it owns, co-owns, develops, leases, operates and
franchises hospitality real estate. Its primary focus is
full-service upscale, upper upscale and lifestyle hotels in major
gateway cities and regional centres, as well as hotel, resort and
campsite properties in select resort destinations.
PPHE Hotel Group benefits from having an exclusive and perpetual
licence from the Radisson Hotel Group, one of the world's largest
hotel groups, to develop and operate Park Plaza(R) branded hotels
and resorts in Europe, the Middle East and Africa. In addition,
PPHE Hotel Group wholly owns, and operates under, the art'otel(R)
brand and its Croatian subsidiary owns, and operates under, the
Arena Hotels & Apartments(R) and Arena Campsites(R) brands.
PPHE Hotel Group is a Guernsey registered company with shares
listed on the London Stock Exchange. PPHE Hotel Group also holds a
controlling ownership interest in Arena Hospitality Group, whose
shares are listed on the Prime market of the Zagreb Stock
Exchange.
Company websites: PPHE Hotel Group | Arena Hospitality Group
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END
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