Park Plaza Hotel owner refinances £150m in debt

PPHE Hotel Group, the owners of Park Plaza Hotel and Holmes Hotel, has refinanced more than £150m in debt.

The debt, which covers all six of its Dutch hotels, as well as debt from Holmes Hotel in London, comes from an existing loan with Aareal Bank.

The original loan with Aareal was established in 2016, with a maturity date of June 2026, but this has now been pushed back to June 2031.

The new debt will be made up of two parts, a 160m euro (£134.8m) tranche and a £16m tranche.

The euro tranche will have a fixed interest rate of 2.765 per cent until June 2026, followed by a rate of 4.49 per cent until 2031.

Meanwhile, the sterling tranche will have an interest rate of 3.9 per cent until June 2026, then a competitive floating interest rate.

The original terms of the loan had an interest rate of 2.165 per cent on the euro loan and 3.3 per cent on the sterling loan.

The refinancing was based off an independent valuation commissioned by Aareal which found that the seven hotels covered by the loans were worth £349.2m, in line with the valuations that PPHE made in December 2023.

Daniel Kos, the chief financial officer of PPHE, said: “The new facility continues our strong relationship with an existing lender, Aareal Bank AG.

“It also further confirms the Group’s attractive and stable asset base in key city-centre locations, enabling the Group to secure long term financing on attractive rates, particularly in current market conditions whilst also re-confirming the Group’s EPRA NRV.

“The company takes a proactive approach to its debt financing and this refinancing takes advantage of the inverted interest curve at the point of original maturity whilst also benefiting from a low margin over a longer period of time.”

Last week, the group reported double-digit growth despite delays to multiple hotel projects this year.

Like-for-like total revenue growth at the LSE-listed company was up 4.3 per cent to £187.8m in the six months ended 30 June 2024, from £180m in the first half of 2023.

The total revenue performance for PPHE’s London portfolio was flat “against a strong 2023 comparative”, the company said, with “solid revenue growth in all other territories”.