Today’s proposal to acquire full ownership of the land for its Hoxton scheme is welcome evidence that PPHE’s continued growth is very much in hand. The company’s strong development record, sustained by recent major openings in London, coupled with the established strength of its reach in the capital, reinforce confidence in this exciting and potentially lucrative project. Moreover, it can only benefit from the introduction to London of lifestyle “art’otel” by PPHE at high-profile Battersea Power Station. Construction is set to begin in Q2.
This announcement is reassurance of progress as PPHE’s involvement in London Hoxton is longstanding (it acquired the site via a joint venture 10 years ago). Consideration for the outstanding interest is £35m, which is comfortably affordable, given PPHE’s likely excess liquidity (after last summer’s Waterloo sale, we estimated £250m+ cash plus a valuation surplus). Importantly, it provides control both of construction and in due course of realisation of value. The sale and leaseback of Waterloo, the largest London hotel opening in 2017, was a powerful endorsement of the PPHE business model with an effective c 100% return in just four years, while retaining an interest through a long-term lease on attractive terms.
The scheme is mixed-use, ie office/commercial but mainly a 318-room “art’otel”. This established “lifestyle” brand is in keeping with Hoxton’s neighbourhood and a new social environment and desire for differentiation, with “lifestyle” hotels increasingly seen as an attractive and strategic market by most hotel groups. A post-close update is expected imminently.