PPHE to launch €250m expansion fund

PPHE Hotel Group, the international hospitality real estate group which develops, owns and operates hotels and resorts under brands including Park Plaza and Art’otel (pictured), is launching a new European Hospitality Real Estate Fund of up to €250m (£220m) equity.

The fund, which is subject to regulatory approval, is intended to support hotel acquisitions focusing primarily on value-add investments across Europe and will launch with an initial asset in Rome. Hotels acquired by the fund will be operated by PPHE’s hospitality operating platform.

PPHE also confirmed that Clal Insurance would participate as a cornerstone investor in the fund and had committed to invest up to €75m (£66m), with an upper limit of 49% participation.

The group said the fund would enable it to accelerate its strategy of identifying, acquiring and developing "attractive hotel assets across a range of key European markets".

In its initial form, participation in the fund will be 51% by PPHE and 49% by Clal, with PPHE contributing the ownership of its existing Rome asset to the fund for an agreed value of €29.3m (£25.9m). Clal will subscribe an initial €28.1m (£24.8m) in cash.

PPHE has committed to participate in the fund for up to €50m (£44m) in cash and/or assets.

In the coming year, additional investors will be able to participate for the remaining €125m (£110m) equity, following regulatory approval. With full equity subscription and combined with a targeted 50% bank leverage the investment potential of the fund will be around €500m (£442m).