UK: PPHE Hotel Group has entered into a joint venture with Clal Insurance, an Israeli insurance company, in respect of Park Plaza London Riverbank and the art’otel London Hoxton development.
On completion of the transaction, Clal will become a minority partner and owner of 49 per cent of the shares in one special purpose company (JVCo), holding indirectly the real estate and operations of both the Riverbank and Hoxton hotels.
PPHE will remain a majority owner of the properties by retaining a 51 per cent holding in JVCo. As part of the transaction, the group will receive a cash injection of £113.7 million.
Clal will pay a further £12.1 million to fund PPHE’s portion of the remaining equity commitments of the art’otel development. The deal values the two projects (Riverbank and Hoxton) at £542.3 million.
The Park Plaza London Riverbank is a 646-room hotel located near the Thames on London’s Southbank.
Development of art’otel London Hoxton is due to complete in Q1 2024 and will comprise a 27-storey building in Shoreditch. It will feature 343 rooms.
Eli Papouchado, chairman and founder of PPHE Hotel Group, said: “We are excited to enter into this joint venture with Clal on Park Plaza London Riverbank and art’otel london hoxton, which are strategic assets in our award-winning portfolio. Clal’s investment reflects our mutual confidence in the strength of the London hospitality real estate market. The agreement values these two assets at the group’s latest net asset value and the proceeds will enable the group to pursue new growth opportunities as the pandemic period subsides. The joint venture with Clal comes at a very exciting time as we look to rebuild our business, capitalising on the extensive investment programmes, which we completed just before the pandemic struck.”
Boris Ivesha, president and CEO of PPHE Hotel Group, added:“London is one of world’s most resilient hotel and real estate markets and it typically rebounds quickly after downturns, largely due to its wide appeal to tourists and business travellers alike. We are delighted to see signs of growth and recovery already in the UK market.
Ivesha continued: “We are very proud and excited for our largest Park Plaza London hotel, to be selected by the All England Lawn Tennis Club (‘AELTC’) to be the Official Player Hotel for the championships 2021 (‘Wimbledon’), in order to provide a minimised risk environment for all players and their support teams for this year’s championships. As the Official Player Hotel, we have worked closely with the AELTC to provide a full service hospitality offering including testing and recovery centres, gyms, hospitality desks for players and highly tailored nutritional food and beverage offerings.”
The transaction is expected to complete on or before 30 June 2021.