TIDMPPH
RNS Number : 8129S
PPHE Hotel Group Limited
14 March 2019
14 March 2019
PPHE Hotel Group Limited
("PPHE" or the "Company" or the "Group")
Joint Venture for art'otel(R) in New York City
PPHE, an international hospitality real estate group, is pleased
to announce that on 13 March 2019 the Company, through a
wholly-owned subsidiary, entered into a joint venture agreement
with Largo 542 West 29(th) Street Partners LLC, an affiliate of
Largo ("Largo"), a New York based real estate development and
investment firm, to acquire properties located at 538, 540 and 542
West 29(th) Street, New York, United States of America (together
"the Property"). The aggregated consideration for the acquisition
of the Property was US$ 42 million plus associated acquisition
costs.
The joint venture intends to develop a mixed-use scheme
consisting of a 98-room art'otel(R) branded hotel with extensive
public areas and 55 residential condominium units (the "Project").
PPHE and Largo each hold a 50% interest in the joint venture and,
once the hotel is operational, PPHE will manage it under a
management contract.
The Property is located in West Chelsea by the popular and
regenerated High Line on the West Side of Midtown Manhattan, a
short walk from the Meatpacking District, Penn Station, Madison
Square Garden and immediately adjacent to Hudson Yards, the largest
private development in the US. This area has undergone large-scale
redevelopment in recent years, creating a buzzing new neighbourhood
known as the preeminent art gallery district in New York City,
renowned for restaurants and bars and is an ideal location for the
Group's art-inspired lifestyle art'otel(R) brand. The interior
design of the art'otel will be inspired by a signature artist,
whose original works will be displayed, and the hotel will offer a
destination restaurant and bar.
This Project is in line with PPHE's development strategy to
target real estate in prime locations and attractive geographies
where it believes there is significant upside potential to drive
growth and long-term value through both its property portfolio and
operations. This Project is also part of the Group's plan to bring
art'otel(R) to major cities, building on the success of the brand
in Amsterdam, Berlin, Cologne and Budapest, and the development of
art'otel london hoxton and art'otel london battersea power
station.
Joint Venture Agreement
The joint venture, through a wholly-owned subsidiary (the
"Property Owner") has acquired the fee interest in the Property.
The consideration paid by the Property Owner for the acquisition of
the Property was in aggregated US$ 42 million plus associated
acquisition costs (the "Property Acquisition"). The Property
Acquisition was partly funded with a US$22.15 million loan (the
"Loan") from Bank Hapoalim B.M. (the "Lender"). The Loan is secured
by a first priority mortgage encumbering the Property and each of
certain Largo guarantors and PPHE have delivered certain customary
guarantees in favor of the Lender.
The balance of the purchase price for the Property Acquisition
and associated costs is funded by Largo and PPHE. The total capital
committed by PPHE to the joint venture in respect of the
pre-construction phase, including the property acquisition and
certain pre-construction costs, is US$ 17.6 million, to be funded
from the Company's existing cash resources.
Under the terms of the joint venture agreement, the parties
shall negotiate a construction agreement to be entered into between
the Property Owner and Largo (or an affiliate thereof), as
contractor, for the development of the Property (the "Construction
Agreement") subject to the agreement of mutually acceptable terms
and seek third party construction funding (the "Construction
Conditions"). If these Construction Conditions are not met, each
member of the joint venture has a call right in respect of the
other and if neither party buys, there are certain exit provisions
with PPHE preserving the right to retain the Property.
The joint venture arrangements also contain customary exit
provisions which will apply following satisfaction of the
Construction Conditions, and pursuant to which the parties may
require, or be required, to acquire each other's interest in the
joint venture in certain limited circumstances.
PPHE's obligations under all of the above arrangements are, to
the extent they are not within PPHE's sole discretion (and together
with its funding obligations and any guarantees to the bank)
subject to a monetary cap which is materially below the threshold
for a class 1 transaction (as defined by the Financial Conduct
Authority's Listing Rules).
Boris Ivesha, President & Chief Executive Officer of PPHE
Hotel Group said:
"We are delighted to have acquired an interest in this property
which is at the centre of the new Hudson Yards, West Chelsea,
Manhattan. We have a proven track record of successful property
development and creating value throughout the hospitality real
estate supply chain. We relish the opportunity to enter this new
market and expand our footprint into the United States.
Together with Largo, we will embark on this exciting development
project with the aim to own and operate the first art'otel outside
of Europe as we look to further expand our presence in major
gateway cities."
About Largo
Largo is a private real estate development company specialising
in the acquisition, development and construction of luxury
multifamily, commercial and mixed-use projects in New York City.
Since its founding in 2009, Largo has successfully developed over
1.5 million square feet of luxury rental apartments, condominiums,
office buildings and retail in prime locations in Manhattan and
Brooklyn. For additional information, please visit
www.LargoNYC.com.
Enquiries:
PPHE Hotel Group Limited
Daniel Kos
Chief Financial Officer & Executive
Director
Robert Henke
Executive Vice President of Commercial
& Corporate Affairs Tel: +31 (0)20 717 8600
Hudson Sandler
Tel: +44 (0)20 7796
4133
Wendy Baker / Sophie Lister Email: pphe@hudsonsandler.com
Notes to editors
PPHE Hotel Group is an international hospitality real estate
company, with a GBP1.6 billion portfolio of primarily prime
freehold and long leasehold assets in Europe.
The Group's guiding principle is to generate attractive returns
from operations and long-term capital appreciation.
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.
The 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, the
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. This multi-brand
approach enables the Group to develop and operate properties across
several segments of the hospitality market.
The Group is one of the largest owner/operators of hotels in
central London and its property portfolio comprises of 38 hotels
and resorts in operation, offering a total of approximately 8,800
rooms and 8 campsites, offering approximately 6,000 units. The
Group's development pipeline includes two new hotels in London
which are expected to add an additional 500 rooms by the end of
2022/2023.
PPHE Hotel Group is a Guernsey registered company and its shares
are listed on the Premium Listing segment of the Main Market of the
London Stock Exchange. PPHE Hotel Group also holds a controlling
ownership interest (51.97% of the share capital) in Arena
Hospitality Group, whose shares are listed on the Zagreb Stock
Exchange.
Company websites
www.pphe.com
www.arenahospitalitygroup.com
For reservations
www.parkplaza.com
www.artotels.com
www.arenahotels.com
www.arenacampsites.com
For images and logos visit
www.vfmii.com/parkplaza
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London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
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END
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