A subsidiary of Amsterdam's PPHE Hotel Group has signed a deal to sell and leaseback the just-opened Park Plaza London Waterloo hotel.
A unit trust created on behalf of several clients of CBRE Global Investors is reportedly purchasing the hotel for £161.5 million, subject to a sale and a 199-year leaseback. The trust will pay an initial rent of £5.6 million per year, with annual inflation adjustments subject to a cap and a collar.
"This sale and leaseback will unlock the capital invested in Park Plaza London Waterloo whilst allowing us to continue to benefit from the operation and associated profits," Boris Ivesha, president and CEO of PPHE Hotel Group, said in a statement. "This transaction is in line with our strategy to realize shareholder value."
CBRE Global Investors carried out an independent valuation of the hotel giving an aggregate value of £250 million (approximately £500 thousand per key).
The sale and leaseback will let the Group release 65 percent of that value while retaining a long-term lease, control of the operations and associated profits of the hotel, thereby keeping the remaining 35 percent within the Group. As of May 31, the Hotel had a book value of approximately £124 million.
The transaction, which is subject to certain conditions precedent commensurate with the sale and leaseback being fulfilled, is expected to be finalized this month.
Following the repayment of the existing facility and the deduction of the transaction costs associated with the sale and leaseback, together expected to be approximately £80 million, approximately £80 million will be readily available cash and is intended to be used to further improve and grow the Group's portfolio.