PPHE Hotel Group refinances eight hotels with Aareal

Park Plaza hotels owner-operator PPHE Hotel Group has refinanced its six Dutch hotels and two more in London with long-standing lending partner Aareal Bank.

Park Plaza hotels owner-operator PPHE Hotel Group has refinanced its six Dutch hotels and two more in London with long-standing lending partner Aareal Bank.

Aareal is providing separate, 10-year, fixed-interest loans for the assets in the two jurisdictions. The 10-year terms are in line with PPHE’s drive to extend its debt maturities and lock in current historically low interest rates.

The €182 million Dutch portfolio loan bears a fixed interest rate of 2.165 percent while the £150 million loan on the London assets, the Park Plaza Sherlock Holmes and Park Plaza Riverbank (pictured), was issued at a 3.248 percent fixed rate.

The two new facilities replace and will repay a single loan provided by Aareal in December 2013. PPHE said that the refinancing extends the weighted average term to maturity of PPHE’s debt facilities to 9.3 years, from 2.7 years.

Last month the hotel group put a 12-year, £182.4 million fixed-rate loan in place from US insurer AIG, to refinance its London flagship Park Plaza Westminster Bridge hotel. The Lonon listed company also refinanced Park Plaza Victoria in London with a fixed-rate, 10-year loan, with Cornerstone in April.

For the latest refinancing, the two London hotels were valued at £254 million, and the Dutch properties at €279.2 million, taking into account planned refurbishments.

The combined book value of the hotels at the end of December 2015 was £342.9 million, and the estimated book value after their refurbishment is £380 million. The loans funded on 17 June.

Boris Ivesha, PPHE’s chief executive, said: “This refinancing is part of our ongoing programme to refinance assets within the group with longer term facilities which enable us to continue to invest in refurbishment works at these hotels, as we remain focused on growing our market share and delivering customer service.”

Lenders in Europe have noticed a pick up in interest from investors interested in refinancing by taking on longer-maturity, fixed rate finance for portfolios they intend to hold. Earlier this month Lynn Gilbert, head of senior lending at M&G Real Estate Finance, said: “Borrowers are saying: ‘Interest rates are at such a low level and maybe values aren’t rising so fast that maybe I don’t mind locking in for a longer term.’”

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