Cornerstone refinances Victoria hotel with £87m loan

Cornerstone Real Estate Advisers has provided an £87 million loan to PPHE Hotel Group to refinance the Park Plaza Victoria hotel in London.

The facility has been provided for ten years and carries a fixed interest rate of 3.41 percent. The hotel has been independently valued at £161.5 million, putting the facility’s loan-to-value (LTV) ratio at just under 54 percent.

The 229-room Park Plaza Victoria, located close to London’s Victoria train station, is currently financed with a five-year loan provided by German lender Aareal Bank. The Aareal loan comprises a sterling tranche and a euro tranche and will remain in place secured by two of PPHE’s London hotels and six of its Dutch hotels.

Cornerstone’s loan will be used to repay £64.8 million of the Aareal facility and the balance will fund its ongoing hotel development programme and will also be used for corporate purposes.

The new loan is secured by a first charge over the Park Plaza Victoria as well as pledges over the shares in the company which owns the freehold of the hotel and its related operating subsidiaries. Funding is expected to take place on 5 April 2016.

PPHE said that it continues to evaluate financing proposals for some of its other assets and is currently in discussions regarding long-term financing for another of its London hotels.

“As previously announced, the Board is keen to take advantage of current favourable market conditions and we are delighted to have secured the refinance of Park Plaza Victoria London,” said Boris Ivesha, President & Chief Executive Officer of PPHE Hotel Group Limited. “This agreement marks the start of a new relationship with Cornerstone and Mass Mutual and we are delighted with their commitment and support.”

Ivesha added: “The new facility enables us to invest further in this well-established and well-performing hotel and our experienced management will continue on optimising its performance, growing its market share and delivering great customer service.”

Cornerstone is a subsidiary of US life insurance company MassMutual Financial Group. The firm’s European real estate debt platform was launched in 2012 and is focussed on the senior fixed-rate UK loan market. The firm targets all sectors of the commercial and residential real estate market. Loans are typically written for between seven and 20 years up to 65 percent LTV.