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On Thursday, PPHE Hotel Group (LSE:PPH) announced a significant refinancing deal with Aareal Bank, extending the term of its existing loan for its Dutch hotel portfolio and the Holmes Hotel London. The refinancing arrangement extends the maturity of the original loan, which was set to expire in June 2026, to a new maturity date of June 2031.
The newly structured facility is split into two segments: one for the Dutch hotels, amounting to €160 million, and another for the Holmes Hotel in London, totaling £16 million. The euro portion of the loan will feature a fixed interest rate of 2.765% until June 2026, after which it will increase to 4.49% until the new maturity date. The sterling portion will carry a fixed interest rate of 3.9% until 2026, transitioning to a competitive floating rate thereafter.
Compared to the previous terms, which had a fixed interest rate of 2.165% for the euro loan and 3.3% for the sterling loan, the new rates reflect a higher cost. Nevertheless, the refinancing has been structured with financial covenants based on loan-to-value ratios and debt service requirements to ensure stability.
Valuations conducted by Aareal Bank affirmed that the combined market value of the Dutch hotels and the Holmes Hotel remains at €414 million, consistent with valuations from the previous December. The new facility is non-recourse and secured by existing mortgages on the properties, which provides a robust financial underpinning for PPHE Hotel Group as it continues to manage and develop its hotel assets.
Daniel Kos, Chief Financial Officer of PPHE Hotel Group, highlighted the benefits of this refinancing. He emphasized that the arrangement reinforces the strong relationship with Aareal Bank and underscores the value and stability of the group’s assets in prime city-centre locations. This refinancing enables the group to secure long-term financing under favorable terms, especially in the current market climate, while also affirming the company's EPRA Net Reinstatement Value (NRV).
At 10:36 BST, shares in PPHE Hotel Group were trading down by 1.88%, standing at 1,251.06p.
