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PPHE Hotel Group has entered a £136.45m facility agreement to fund its acquisition of the freehold interest in Park Plaza London Waterloo.
The two year facility with Bank Hapoalim includes an option to extend subject to conditions. According to the group, funding is expected to occur in the coming months following the fulfilment of standard conditions precedent.
The loan will be secured by a first legal charge over the group’s interest in the hotel.
The facility also carries a floating interest rate. Approximately 90% of the rate will be hedged, with the final all-in rate to be confirmed upon completion of the hedging.
The financing replaces a previous structure where the hotel carried a £210m lease liability. Future lease payments were projected to exceed the cost of the new facility.
PPHE said the transaction increases its freehold exposure and provides protection from future rental uplifts. The move is intended to simplify the balance sheet and reduce inflation risk.
Daniel Kos, chief financial officer of PPHE, said: “We are pleased to have entered into a new facility with Bank Hapoalim, which has been a strategic partner for several decades, enabling us to acquire the freehold interest in our flagship Park Plaza London Waterloo hotel, located on London’s thriving South Bank.
“Opportunities to acquire marquee London assets like this do not come along often, so we are delighted to have full ownership over the property. Over the term this new debt facility is expected to be earnings accretive, removing a growing future lease liability and reducing our exposure to inflation risk.”
He added: “Importantly, the transaction further simplifies and materially de-risks our balance sheet, building on the progress we have made across a number of recent transactions.”
