PPHE Hotel Group has reached an agreement with Clal Insurance to participate as a cornerstone investor in PPHE’s new European Hospitality Real Estate fund of up to €250 million equity.
Earlier this month, PPHE said it was in advanced discussions with a cornerstone investor regarding the launch of the fund, which PPHE says will allow the acceleration of its strategy of identifying, acquiring and developing attractive hotel assets across key European markets. PPHE also said the fund would drive the growth and value of its scalable hospitality management platform, as it will be appointed as the hotel management company for all hotels acquired through the fund.
Further to its announcement in March, PPHE says Israel-listed Clal Insurance has now committed to invest up to €75 million, with PPHE committing to participate in the fund for up to €50 million in cash and/or assets.
In its initial form, participation in the fund will be 51% by PPHE - with PPHE to contribute its €29.3 million Rome asset to the fund – and 49% by Clal, with the insurance company subscribing an initial €28.1 million in cash.
Following the receipt of regulatory approval in the coming year, additional investors will be able to participate for €125 million equity.
PPHE says that with full equity subscription and combined with a targeted 50% bank leverage, the investment potential of the fund will be around €500 million.
What they said
When launching the fund earlier this month Boris Ivesha, CEO of PPHE Hotel Group, said: "This new fund would represent another significant step forward for PPHE strategically, as we continue to expand our leading portfolio of premium hotels while also taking advantage of our unique flexible and scalable in-house hospitality management platform. The fund would enable us to accelerate our ability to capture the attractive opportunities we see in front of us, via the use of non-dilutive third-party capital, while also playing to our strengths as a fully integrated acquiror, developer and manager of attractive city centre hotels. This would also provide a compelling financial return profile for all fund investors, including PPHE, helping to further drive our future growth and enhance returns for our own shareholders."