PPHE Hotel Group Limited (LON:PPH), the international hospitality real estate group which develops, owns and operates hotels and resorts, has announced that its wholly-owned subsidiary has entered into an agreement for the sale of its development site located in Manhattan, New York.
This New York City site was acquired in 2019 with a view to developing the Group’s first hotel in the US. However, subsequent to the acquisition, the regulatory landscape for ground-up hotel developments in New York significantly altered, which led the Group to conclude that a hotel development is not viable for this site. The Group has optimised the site to maximise its exit value through demolition works and the acquisition of air rights.
The transaction has been structured as a sale of the freehold of the site to a US real estate developer for a purchase price of $33.5 million. There are no due diligence conditions to consummate the sale, and it is expected that the disposal will close in the coming months. The sale proceeds will be used to repay the associated debt of $8.3 million, with the balance of funds to be deployed in accordance with the Group’s capital allocation strategy.
Greg Hegarty, Co-CEO of PPHE Hotel Group, commented:
“We are pleased to exit this longstanding development site near Hudson Yards in New York, which demonstrates the Group’s focus on and the proactive pursuit of its strategy. The site was acquired in 2019 with the intention of developing a hotel and condominiums. However, with the significant changes to the regulatory landscape following acquisition, we believe this disposal presents an opportunity for us to release capital, which can be redeployed into our core geographic regions.”
