Pphe Hotel Group Ltd Stock

Good morning, ladies and gentlemen, and welcome to the PPHE Hotel Group Limited Investor Presentation. [Operator Instructions] And I would now like to hand over to the team from PPHE Hotel Group. Greg, good morning, sir.

Hello. Good morning. Good morning, and welcome to our 2026 half year results. My name is Greg Hegarty. I'm the Co-CEO of the PPHE Hotel Group. And to my left, I'm joined by Robert Henke, our EVP of Commercial. And to my right, I have Daniel Kos, our Chief Financial Officer. So we are really pleased to report good solid half year results, good strong operating performance. But before we get into the detail, I think it will be poignant to show a quick video. Thank you.

[Presentation]

Thank you for that. All right. What we're going to do, I'm going to talk you through some of our strategic and operational updates. So we have had several strategic financing highlights during the period. These include the acquisition of the freehold of Park Plaza London Waterloo for GBP 147.9 million, which was funded by a new 5-year facility at GBP 136.5 million. This transaction has simplified and strengthened our balance sheet, and Daniel will take you through that a little bit more as we go through the presentation.

We also refinanced our art'otel in Rome for GBP 27.6 million, which was also on a 5-year facility. That's in euros. And as a further highlight, most recently, we have disposed of our New York development site last Friday at USD 33.5 million. The reason for that was really predominantly due to regulation changes. I mean the development really unviable in the U.S. So we optimized the site. We purchased some air rights on the site. So that means it was development ready, so it made sure we could optimize it for a sale, which obviously we did and that transacted last week.

The proceeds of this will be used to repay the debt on that site. However, the additional proceeds will be used in our geographical regions. Along this, we also have numerous land pipeline within the U.K. You can see we're aware we have Westminster Bridge Road, our development on the 40 and on Leman Street as well as potential to develop our existing assets in our portfolio. Our future focus in the near term is very much going to be launching our 5,000 square meters of office space at Hoxton. That will be One Rivington, our co-working concept. That's due to open in mid-November and is currently being marketed to expected tenants.

And as always, we will always continue to focus on cost efficiency, operational improvement. We are also doing a significant amount of technological transformation in our front house operations, including the introduction of kiosks across our portfolio, and we will continue to focus on those efficiencies as we go forward. Moving on to the next slide. I think it was pointing just to touch on this following the completion of a strategic review period. In November 2025, the Board announced that it was undertaking a strategic review to consider a number of options to maximize value for all shareholders.

Subsequently, in May 2026, an indicative proposal regarding a possible cash offer was received from the Fattal Hotel Group at GBP 22 per share. The Board evaluated the proposal with its independent adviser and sought feedback through a consultation process from a significant portion of our shareholder base. During this consultation, Euro Plaza Holdings, the company's largest shareholder, withdrew its support from the offer of Fattal. Consequently, Fattal determined it would not proceed with any further context of the strategic review and it concluded in July 2026.

Despite this fact, the strategic review did not result in a firm offer for our shareholders, it did, however, facilitate significant deeper discussions around the future strategy of the group. This has resulted in the Board concluding shareholder value, so this resulted in how the Board could conclude and how it would deliver shareholder value for the future and how this can be maximized with clear operational delivery and balance sheet simplification going forward. So with that in mind, we are putting all of those findings into our proposal to see how we move forward as a company in due course. So moving on to that, I'll hand over with Daniel with the results of the first half. Daniel?

Thank you, Greg. So as Greg already said, we are quite pleased with the group's performance for the first 6 months of the year, which reported solid growth across all key metrics. The achievement is realized despite the geopolitical environment that the group currently trades in. So total revenue on a like-for-like basis was up 4.7% to GBP 208 million, which resulted in a like-for-like EBITDA growth of 8% to GBP 49 million. And that represented a margin expansion of 50 basis points, reporting a 23.5% margin in the first 6 months.

So as usual, our operations are quite seasonal and the majority of the group's EBITDA and margin is realized in the second half. And that's mainly due to the seasonal effects of our Croatian leisure portfolio that's really ramping up in the high season in July and in August. So total revenue increased really on the back of a solid meeting and events revenue growth in the U.K., particularly in the first quarter, I would say, but also due to our like-for-like average RevPAR growth of 3.1%. And that RevPAR growth increased on the back of a like-for-like room rate increase of 3.2% and occupancy stable at 72.5% -- our increased EBITDA performance was offset by higher interest costs after the refinances that we've done in the last 12 months.

So therefore, our 12 months rolling EPRA earnings stayed flat at GBP 53 million or GBP 1.25 per share. Based on these earnings, the group proposes to pay an interim dividend of GBP 0.17 per share, which is in line with last year. In terms of total revenue, diving a bit deeper in the regions because it's quite different across the regions. So as you can see on this slide, the United Kingdom has clearly been the main driver behind our growth with a total revenue growth of 6.8% and a RevPAR growth of 5.2%, so while the ramp-up of Hoxton is obviously supporting this growth, in general, we had quite a strong period in the U.K.

Particularly the first quarter was very strong with us with some very large-scale meeting events taking place in the usual slower month of January. So total revenue growth in the first quarter in the U.K. was 8.8% with the second quarter showing a solid growth of 5%. As you might all be aware, the Netherlands started the year with a substantial fiscal headwind as the government increased the VAT from 9% to 21% on hotel bedrooms. So as the majority of our pricing publicly is inclusive of VAT, this would have resulted in a 12% negative impact on room rates.

I'm therefore, quite pleased to say that we have managed to mitigate the total revenue decline in the Netherlands to 5.3% in local currency and 2.4% in sterling instead of the 12% that was expected. This drop came mainly on the back of occupancy at this point and only a drop of 3.4% in local currency in room rates. Croatia was shut for the majority of the part of the first 6 months, and the performance isn't really reflective of a normal trade in the 6 months. And Germany, on a like-for-like basis, reported a year-on-year flat revenue and 2.9% growth in sterling terms.

With regards to the EBITDA growth of 8%, the U.K. was again the main driver with both EBITDA growth and margin expansion. This growth was achieved despite of the higher business rates that are taking effect from the second quarter onwards and will increase up to and including 2028. In the Netherlands, the expected EBITDA drop amount to GBP 1.3 million, which in local currency is largely similar to the top line revenue loss we had on the back of the VAT changes we've just discussed. So anything lost in the top converts 100% to the bottom, unfortunately. However, we continue to ramp up our newly opened properties and further rollout of automation and operational efficiency programs to mitigate the effect of these fiscal headwinds.

So in terms of adjusted EPRA earnings, the rolling 12 months stayed flat with December at GBP 53 million, which is GBP 1.25 per share. As you can see, earnings were positively impacted by the increased EBITDA levels, but offset with higher interest rate expenses after the substantial refinancing we've done in the last 12 months. Free cash flow for the rolling 12 months amounted to EUR 76 million and has been largely used to pay dividends of GBP 17 million, bank loan repayments of GBP 26 million and ROI CapEx, which included, for instance, 3 freehold acquisitions.

One was the Leman Street acquisition in the city. The other was the freehold acquisition of the Park Plaza Park Royal and the last one was the buyback of the freehold in the Park Plaza Waterloo, which I will detail later on. Net debt increased from GBP 775 million at year-end to GBP 932 million at the end of 30 June, which is an increase of GBP 157 million, largely caused by the buyback of the freehold in Park Plaza Waterloo. The new bank loan that we took to fund this acquisition has been signed with Bank Hapoalim and has a 5-year maturity.

The loan has a loan-to-value of 70% at acquisition date, which will be amortized further in the coming 5 years to a loan-to-value of 65%. 90% of this loan is fixed for 2 years at an all-in interest rate of 5.9% -- after this transaction, the average group loan-to-value increased to 39.5% from 35% before, which we feel is still acceptable levels. The majority of our loans have now been refinanced and the average maturity has been extended to 4.4 years with an average cost of debt of 4.4%.

So in terms of the Waterloo transaction, we had quite a substantial transaction here, whereby we bought back the freehold interest of the Park Plaza Waterloo for GBP 148 million and inclusive of purchase expense of GBP 156 million. To explain the rationale behind this transaction, it's probably best if we go back to 2017 when we initially sold the land and leased it back for 200 years. This transaction was shortly done after we had built and opened the hotel in the summer of 2017. We had an all-in cost of construction of GBP 125 million, and we're able to sell the asset for GBP 161 million under a 200-year leaseback at 3.2% cap rate.

So the sale and leaseback, the 3.2% cap amounted to a rent of GBP 5.6 million back in the day when we did this. And this is inflation adjusted going forward. And it left the hotel with the remaining EBITDA post rent of GBP 5 million. So this remaining EBITDA post rent is valued as a leasehold value at GBP 80 million back in the day. So this transaction, it really makes sense for us back in the day. It enabled us to get more cash out than we had spent on building the hotel and it remained us with an asset valued at GBP 80 million. And the GBP 161 million of cash, it was used to pay a special dividend back in the day and the rest was recycled back in the group to fund growth.

Our underwriting back then expected that EBITDA would grow at a similar pace as the inflationary adjustments on the rent. This was based on experiences we had in the 10 years preceding to this deal. However, COVID, labor shortages due to the Brexit, energy cost increases, national insurance increases and business rate increases made that our EBITDA did not grow at a similar pace as the rent adjustment. So really, the rent was eroding the EBITDA over time. So with this acquisition, we stopped the EBITDA erosion.

The freehold was bought back at GBP 13 million lower than we did the initial deal in 2017 at a cap rate of 4.9%. So when we bought back this lease, the rent increased from the GBP 5.6 million back in the day to GBP 7.3 million at acquisition date. So after this transaction, the free cash flow of the group will remain at similar levels, slightly lower at the start due to the high base interest rates. However, on the long run, these will improve with annual interest expenses expected to decline, expected to decline because we are amortizing the loan. And if the interest rates in the future go down further, we will benefit from that. And that's opposed to a rent that was going to increase 4% on an annual basis.

This transaction led to a large simplification of our balance sheet, derisking the impact it had on EBITDA erosion and holding the freehold will create more optionality with the future with this asset. Handing back to you for current trading and outlook, Greg.

Thank you, Daniel. So I'm pleased to report summer trading in the city locations is comparable to the similar trends we've observed in half 1. And we actually see these mostly improving in -- as half 2 continues. U.K. properties also continue to perform strongly with a gradual improvement in momentum seen in the Croatian region through the summer season. As we've already alluded to, we have a clear focus on operational delivery alongside future balance sheet simplification as we go forward into the second half. And most of all, trading is in line with the consensus of the expectations for full year '26 despite the headwinds which we are seeing in the regions. So I think with that in mind, let's go to some Q&A, Robert.

Thank you. Probably one for you, Daniel. We've received a number of questions around the largest shareholder, Euro Plaza, rejecting the offer that was proposed. Can you give some more context perhaps as to the rationale and the reason for?

Obviously, I see that the 2 questions raised here are around the decision of our largest shareholder to oppose this transaction. So as Greg already alluded to, we had a planned offer from Fattal Hotel Group, which the majority of the substantial amount of shareholders we consulted supported. Also, the Board supported it as being fair value. However, Euro Plaza has decided to not support this. And with the acceptance conditions that Fattal and later placed in their offer, the offer was not deliverable. We can unfortunately not detail the reasoning or go into details of the reasons why the objection was. We cannot comment on somebody -- on the shareholder -- on the largest shareholder subsequently.

Thank you. Greg, one for you. There's a question around the development sites. You've obviously touched on the slightly. What do you see as sort of the next stage in all of these projects?

So the pipeline. The pipeline, so currently, at the moment, I mean, there is no getting around the economic headwinds and the government support we are actually seeing in the hospitality sector, specifically in the U.K. is a difficult one. I think ultimately, we obviously want to make sure we deliver the best value we can for our shareholders. With that in mind, and I think it's no secret, we will make sure that we look at all of our land bank considerably before implementation in any developments at the U.K.

I think as what you can see at the moment, we have paused it slightly whilst we are, one, got through the strategic review process; and two, then assessing what the future economical rhythm looks like in the U.K. before we continue. So I think with that in mind, we are still ongoing reviewing this pipeline. And at the moment, we are not pushing forward all the button on the development at its current pace. So we will make sure, as I've already said previously, we will make sure we make the right decision going forward for the shareholder. So luxury space on that one.

All right. Thank you. That covers a lot of different angles, including the pressure you're seeing in the U.K. marketplace, specifically for new builds and operations.

Doesn't matter if it government business rate pressure, national insurance rate pressure, employee law pressure, just operating the business in general is becoming more and more complex in the U.K., not to mention all of the supply chain issues we currently see, especially also development challenges. We're bringing land sites to an optimum return on investment post opening. So yes, I think I don't think I can get any clearer than that as a business. And I've said it quite formally on record and publicly, the U.K. is a challenging market to deliver future value to shareholders.

Very clear. There's a question around occupancy and rate with occupancy of holding -- almost holding, where is opportunity and strategy. I'll answer this, to be honest, we are in a beautiful business that allows us to alternate between driving occupancy and rate. So it depends on the market conditions and the performance of the hotel. And where we are currently is obviously, we've been driving both occupancy and rates as much as we could. Despite the macroeconomic and geopolitical headwinds, we've been able to maintain largely occupancies.

We assess each hotel individually and see where the opportunity is. So in Rome, for example, we have an opportunity to improve our occupancy and continue to drive the rate strategy that we set out. This is obviously a flagship in the new market for us. In the more established hotels, we will really try and focus on driving the rate as much as we can as the market allows us, dependent on our local competitive set and the dynamics into each of our areas. We are running very busy hotels. So it's always in our benefit and interest to drive more rate where we possibly can.

In Holland, as Daniel said, we've had significant impact of the VAT and not just we, but that the industry as a whole. So there's only so much you can drive the rate, but it's always our intention where we can to drive rate because that is more profitable for us. At the same time, if that opportunity isn't there, we'll go up to occupancy. I think we've also, in terms of the opportunities in occupancy have been further benefited with actually the movement of Dubai isn't as strong as it is year-on-year.

Certain parts of Turkey and Greece is actually pushing European travel trends more to Central Europe, which then is actually moving European travel into our markets. So I think it doesn't matter if it's Croatia, Amsterdam or Germany, slightly stronger occupancy or the opportunity to yield on occupancy are beneficial currently from that factor. That sort of concludes the questions. So Jake, I think it's over to you for the call.

Perfect, guys. If I may just jump back in there, and thank you very much indeed for your presentation for addressing those questions that came in from investors. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But Greg, perhaps before really just looking to redirect those on the call to provide you their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.

Yes, absolutely. Thanks very much. Listen, I think from our aspect and where we're going, the group is in a solid performance. It does have very good solid opportunities to grow the business. We have got maturing assets still coming through our current portfolio, especially coming from Hoxton, especially as we now start launching that co-working. And actually, our markets in the U.K. are very strong.

But notwithstanding this process, which we have just completed, gave us some valuable insights. Those insights have informed the business of where we can create future value for all shareholders, and we look forward to reviewing that and potentially implementing it in the future. But with that in mind, thank you for your support, and I look forward to seeing you next year. Thank you.

Perfect, Greg. That's great. And thank you all once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback. On behalf of the management team, we would like to thank you for attending today's presentation. That now concludes today's session, so good afternoon to you all.

Hello, everyone, and thank you for joining the PPHE 2026 AGM. I would now like to hand over to your host, Ken Bradley from PPHE, to begin. Please go ahead.

Ladies and gentlemen, it is just after 12:00 noon on Tuesday, the 19th of May 2026, and I would like to commence this Annual General Meeting of the company. I'd like to extend a warm welcome to all shareholders, those who are present in person and those who have joined remotely.

For your information, the quorum for this AGM is 2 shareholders present in person or by proxy. And in accordance with the notice of -- the AGM Notice, Vidacos Nominees Limited have appointed Emmanuelle Ronez as corporate representative, which allows proper constitution of the meeting. I hereby confirm that a quorum is present.

The AGM Notice dated the 12th of March 2026, convening the AGM, has been in your hands for the requisite period required by the company's Articles of Incorporation, The Articles, and I will, therefore, take it as read.

To more accurately reflect the views of shareholders of the company, voting today will be done by way of a poll in accordance with the Article 15.7 of The Articles. This is seen as best practice as it gives all shareholders the opportunity to participate in the decision-making of the company and have their votes recorded in proportion to the number of shares they hold.

In my capacity as Chairman, I now call a poll on each of the resolutions set out in the AGM Notice.

[Voting]

The votes taken for the poll will be those of the shareholders who have lodged their proxy votes and the results will be announced via the company's regulatory news service and posted on the company's website as soon as practical once the formal meeting has concluded.

That concludes the formal business of the AGM, and I therefore declare the Annual General Meeting closed. Thank you.

Thank you. This now concludes today's call. Thank you all for joining, and you may now disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the PPHE Hotel Group Investor Presentation. [Operator Instructions] The company announced a strategic review in November 2025, which remains ongoing. And as a result, management may not be in a position to answer all of your questions today. Before we begin, as usual, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand over to the team from PPHE Hotel Group. Greg, good morning, sir.

Good morning. Thank you, Jake. So good morning, and welcome to our 2025 full year annual results. I'm Greg Hegarty, Co-CEO of the PPHE Hotel Group. I'm joined today by Daniel Kos, our CFO; and Robert Henke, our EVP of Commercial.

2025 was another solid financial and strategic year of progress we delivered a great result despite a volatile macro environment. But before we go a little deeper, I think it would be good just to share with you a few highlights of the year.

[Presentation]

Good morning, everyone. I just wanted to spend a few minutes introducing PPHE Hotel Group, if you're not familiar with our company. We are a real estate company active in the hospitality industry. And what makes us unique in the hospitality industry is that we have our own integrated operating platform. So what we do as a business is we own properties, we develop assets. We also operate the products when they are delivered. We were first created in 1989 and have been listed on the London Stock Exchange since 2007. We are currently included in the FTSE 250 and the EPRA Nareit Index.

As a portfolio, we cover 18 different markets, of which London, Amsterdam and a Croatian destination called Pula are our primary markets. We have exposure through asset ownership in 7 capital cities today. So that is London, Amsterdam, Berlin, but also Rome, more recently, Zagreb and Belgrade and Budapest.

Within London, which is our primary market, we are one of the largest owner operators of upper upscale assets, and we have just over 3,700 rooms within Central London as well as some of the largest meeting and event spaces in the city.

What sets us apart, as I said before, is that we own the operating platform. And as we go through the presentation today, we'll talk more about what the platform does, how it's structured and why that is beneficial.

So I'm moving on to some of the more detailed slides. As I mentioned, we have property exposure across different geographies. We're active in 8 countries. That's the U.K., Netherlands, Croatia, as I mentioned, as well as markets like Germany, Austria, more recently, Italy. And we have about 50 properties in operation today as well as a solid pipeline of new projects with 4 projects in London, all with planning permission. So that's our longer-term pipeline.

We have just under sort of 15,000 units in our business, which consists of 10,000 rooms as well as about 5,500 pitches and mobile homes in the Croatian leisure destination. Every year, we have all of our assets valued externally and the valuations on the back end of 2025 came in at GBP 2.2 billion.

The employee count in our business is about 4,500 employees with head offices in the U.K., in London as well as in Amsterdam, Berlin and in Pula in Croatia.

The exposure that investors have is to owning assets, but also the operating side of our business and then development. So we're fully integrated and a one-stop shop as a result.

This model shown here on this chart, basically demonstrates how we create investor value. So what we like as a company is to buy assets with development potential or land sites. We develop hospitality products. We then operate these hotels, and we extract some of the value from these assets to reinvest into the next investment opportunity. And this is a journey that we've been on for well over 35 years with strong shareholders' returns to demonstrate the success of this business model.

Greg, over to you quickly on the CapEx.

Thank you, Robert. Over the last decade, we have invested more than GBP 1 billion into maintaining and expanding our portfolio. Most recently, we completed our largest ever multiyear investment program, exceeding over GBP 300 million, focused on new openings and repositioning existing assets. Both properties are now contributing to EBITDA, and we expect that contribution to accelerate as we continue to stabilize both assets in the future. This reflects our long-term approach on this slide to CapEx. We invest through the cycle. We upgrade quality and ultimately, we unlock future earnings.

Next slide. Looking at some of our high-quality assets in prime locations. Robert has already alluded to, but we do operate 50 hotels in 8 countries with our prime markets being U.K., Netherlands, Croatia and Germany. This shows you the spread of our company and where our percentages lie in terms of those specific geographies. We are in over 18 geographic markets, including 7 capital cities and the majority of our asset value sits within those capital cities.

London and Amsterdam remain key pillars within our company, complemented by strong seaside resorts in Pula in Croatia. Our owned portfolio is externally valued at GBP 2.2 billion with GBP 1.6 billion in freehold, giving us both asset quality and balance sheet strength. These are high barrier to enter locations with durable demand fundamentals attracting into these markets.

Again, explaining the hospitality management platform. Our in-house management platform is a real strategic advantage for PPHE. It gives us full operational control. It aligns owner and operator interest. It provides flexibility around exits and branding of assets, combined with access to Radisson's global distribution system, loyalty and procurement systems, allows us to have scale and efficiently retain control of our complete portfolio. It is a capital-light asset. However, it has capability to drive a capital-heavy business. So this positions us really well for future growth.

Looking at some of our secured pipeline. As you can see here, there is 5 assets as an example. On the left there, we have our land site on the [ B814 ] Park Royal. In the center, we have Westminster Bridge Road. On the far right, we've got our newly acquired Leman Street development. On the bottom left, we have an existing asset of Victoria Park Plaza, how we're going to create a subterranean concept. And on the right, we have New York.

But going in a little bit more detail and zooming into that. At Park Royal, we now have control of both an operating hotel directly next door to it and development site. This has planning permission for 616 units, which will give us multiple operations for value creation options. We also have 6,000 square feet of industrial planning there for us to coincide with that development opportunity as well.

At Westminster Bridge Road, we are advancing the designs on our 186 key bedroom property there. This is likely a select service hotel, again, targeted to be a Radisson RED property. At Leman Street, we acquired the site in our first central location here on this side of London. Again, this is earmarked for a Radisson RED property, moving the portfolio into a more select service model. So we are then becoming very differentiated from full service to luxury to actually select service as well.

At Victoria, we're unlocking an underutilized basement area there and creating 79 keys, again, in a select service model. And above that, we then have a meeting and event facility in this hotel, coupled with the Park Plaza Victoria hotel above it from ground to roof.

Post year-end, we agreed the sale of New York, which is on the bottom right there. I'm pleased to say that is progressing. We disposed of that asset at a value of $33.5 million, and we'll be recycling that cash back into our European core markets as we go forward. Just showing you that this is a disciplined capital business, which actually does capital rotation action within our pipeline.

Looking ahead at our strategic and operational update of 2025. Financially, revenue grew by 5.3% to GBP 466 million with an EBITDA of GBP 138.8 million. RevPAR increased by 2.6%, driven by both occupancy and in rate growth. EPRA earnings held at GBP 1.25, supporting a full year dividend of 39p per share. We absorbed continued government-driven cost inflation, particularly wages, social charges through technology. We've been able to minimize these impacts. And obviously, we've been focusing on efficiency initiatives and improving our productivity within our operational portfolio.

Strategically, we complemented the opening of our assets of the art'otel Rome in 2025. We finalized the full year offering at the art'otel Hoxton. We upgraded 2 of our Croatian camp sites. We expanded our pipeline in London, and we increased our Arena sale -- stake in Arena with GBP 15.5 million, and we completed numerous U.K. refinancing projects.

Looking ahead, we're rolling out our new property management system. We're focusing on more digital automization within our Plaza brands, especially within guest service areas such as reception, and we're improving our guest experience there and also driving efficiency. Cost control always remains a key focus, as I've already alluded to there. But alongside that cost control, we are also stabilizing our recently ramped up assets of Hoxton and Rome, which will then start creating more value in our longer-term pipeline.

Thanks, Greg. So as Greg already said, we are quite pleased actually with the group's performance for 2025, given we had a slow start and also particularly given the external headwinds that we faced, including geopolitical uncertainty and the cost inflation that our industry is facing. Our reported revenues during the period went up with 5.3% to GBP 466 million. And on a like-for-like basis, where we exclude the art'otel Rome that we opened in 2025 and 3 months of art'otel Hoxton, the revenue was up 3.7% to GBP 457 million.

The year unfolded really as a story of gradually strengthening performance with the average room rate for the year increasing with 1.7% now to GBP 164 and a 0.7% increase on a like-for-like basis. We also managed to increase our occupancy with 60 basis points on a reported basis to 75.1%. And on a like-for-like occupancy came in even higher at 130 basis points growth to 75.8%. This blended rate and occupancy increase has resulted in a 2.6% growth in RevPAR reported at GBP 123. On a like-for-like basis, RevPAR came in 2.4% higher.

Whereas we reported an EBITDA decline in the first half of the year, I'm very pleased to say that we've turned this around in the second half, which is typically our strongest 6 months of the year. We've reported an overall EBITDA growth of 1.3% to GBP 138.2 million from the GBP 136.5 million last year. And on a like-for-like basis, EBITDA grew to GBP 139 million.

So our adjusted EPRA earnings came in at GBP 53 million, which is GBP 1.25 per share, which is in line with last year. And on the back of these EPRA earnings, we typically spend around 30% on dividends. So we propose to increase the final dividend to 22p per share versus 21p last year, which will bring the total dividend this year to 39p per share.

Going on to the revenue slide. As said, we reported a revenue growth of 5.3%, but the trends between the territories was quite mixed. As you can see here, the Croatian region showed a strong rate growth of 7.1% whereas the German region reported the opposite with a 5% rate decline, which is mainly due to a strong comparable. In 2024, we have the European Football Cup in Germany, and we had fewer trade fairs in the cities in 2025 where we are present.

Occupancy growth has been the strongest in the U.K. with a growth of 230 basis points, whereas the Dutch region lost most in occupancy term with a decline of 220 basis points. The trend was also quite mixed between the quarters, if you see the lower graph, whereby we had a weak start into 2025 with Q1 rate and occupancy decline, but it largely moved strongly into Q2 and a very strong performance into Q4, albeit more rate led.

Going to the EBITDA slide. So like I said, despite a weak start of the year and the government-imposed cost inflation, we managed to grow EBITDA to GBP 138.2 million. The cost inflation, which included minimum wage increases above the run rate inflation added with national insurance contributions in the U.K. caused our margins to slightly decline versus last year. However, through proactive cost control, we have managed to limit the impact of these cost increases and see potential to continue this in the near future.

So between the territories, we had strong EBITDA growth in the U.K. with margins improving on the back of the ramp-up of Hoxton. The Netherlands and Germany both showed EBITDA declines on the back of their respective revenue declines. However, Croatia showed a good EBITDA and margin growth in the year with an increase of GBP 3.5 million and 230 basis points, respectively. Management and Central this year was impacted by some one-off expenditure caused by staff restructuring costs, which will help us going forward and the implementation cost of some major technology projects in the year. But we remain very focused on cost controlling further, accelerating technology implementation and process automations to drive further efficiencies.

So on EPRA earnings, as said, we reported GBP 53 million, which is in line with last year. On a per share basis, it gets to GBP 1.25 per share. And as you can see in the first waterfall chart, the EPRA earnings were negatively impacted by an increased finance expenses. So these finance expenses largely increased due to the opening of Hoxton last year, which is now fully contributing and the art'otel Rome of this year, which now also impacts the P&L. And we refinanced the Dutch portfolio late in 2024. So the impact of the openings on our EPRA earnings obviously should positively improve in the coming years with the ramp-up of these openings.

In terms of valuations, our EPRA NAV per share declined slightly to GBP 27.40 versus the GBP 27.50 last year. External valuations in the U.K. portfolio came in lower this year, mainly due to the increased business rates that were announced late last year by the U.K. government. Valuations stayed relatively flat in the other territories.

Favorable foreign currency exchange results on the euro-denominated portfolio did offset quite a large part of the impact that the U.K. property valuations had on our NRV. Net debt increased slightly from GBP 750 million last year to GBP 775 million this year, mainly due to the acquisitions we had last year, like we bought the freehold in Park Plaza Park Royal. We bought a development site in the city of London, and we had some extra -- we bought an extra stake in our listed subsidiary, Arena Hospitality Group.

In terms of cash flow, we reported the last 12 months a strong free cash flow before expansion CapEx and loan amortization of GBP 80 million. Free cash flow was positively impacted by our GBP 138 million EBITDA and around GBP 17 million of working capital moves, and we had GBP 18 million of maintenance CapEx in the year and GBP 58 million of interest, ground rent and unitholder payments.

Free cash flow was mainly used to fund expansion CapEx and loan amortizations. Expansion CapEx this year, as said, amongst others, include the freehold in Park Royal, the development site in London and also the significant investment we did in 2 camp sites in Croatia. The GBP 30 million bank loan repayments are in line with our contractual payments and in line with our debt strategy, which has regular amortization in it. We have now come to an end of our substantial CapEx cycle and on the most recently opened hotels in Rome and in London.

So zooming into our debt position, we have around GBP 910 million of gross debt outstanding, of which 75% is sterling denominated and 25% is euro denominated. Net debt is around GBP 775 million, which translates to a conservative loan-to-value of 35% with the properties at market value. The bar chart in the middle shows the maturity profile of the remaining facilities. And in the last couple of months, you have noticed probably in the announcement, we have refinanced 4 facilities that were due in 2026, totaling to approximately GBP 222 million, extending the average maturity to 4.2 years at an average interest of 4.2%. The first large facility up for refinance now is only in 2028. So we have significantly improved our liquidity profile. Greg?

Thank you. So to summarize and for our outlook, 2025 delivered clear progress. Our largest ever investment program completed. art'otel Rome opened successfully. London pipeline has strengthened. The balance sheet materially has been reinforced. In 2026, we will continue to drive operational efficiencies through technological advancement and procurement. Forward booking across all regions is encouraging following a strong start to the year. Despite the ongoing macro volatility, the Board expects to build on 2025 performance with revenue and EBITDA growth driven by stabilizing new hotels and recent investments. We remain confident in delivering full year '26 in line with market expectations. Thank you.

Thank you, Greg. That takes us to the Q&A part of today's session. As already mentioned at the start of the presentation, the company announced a strategic review in November 2025, which remains ongoing. And as a result, we may not be able to answer all of the questions that have been raised. So from the questions that have been raised, I want to go through those that we're able to answer.

So Daniel, this one is for you. What percentage of the portfolio would you consider approximately as sort of noncore?

I mean it's difficult to say in terms of percentage, whether that's from a valuation point of view or from a numerical rooms or just a single hotel point of view. Obviously, strategically, Park Plaza or [ PPNG ] have always focused into city centers and basically the resort type of locations. So I wouldn't necessarily call it noncore, but the assets in the provinces like Leeds and Nottingham or in Holland, Eindhoven and the other provinces are probably considered noncore, if you like, in such a definition.

Thank you. I think that sort of summarizes the questions we've received so far that we are able to answer. We can't answer any questions that are forward-looking or results focused for 2026 and beyond. So if there are no further questions, then we'll have to end the session here today with a poll at the end of the presentation.

Guys, if I may just jump back in there, thank you for your presentation today. Greg, just perhaps before really now just looking to redirect those on the call to provide you their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.

Yes. Thank you, Jake. Well, ultimately, I'd like to thank Investor Meet for the opportunity to reach out to your audience. I think hopefully, through the presentation, it's great to share our company, its strategic direction. I think hopefully, you will all see that PPHE is a superb hospitality real estate company with a scalable platform. And with that in mind, I think we've got that across. I wish you all a very good day, and thank you for your time.

Perfect. Great. That's great. And thank you all once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback. On behalf of the management team of PPHE Hotel Group Limited, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.

Thank you.

Good morning, ladies and gentlemen. Welcome to the PPHE Hotel Group Interim Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during today's meeting, however, the company can review your questions submitted today and will publish those responses where it's appropriate to do so.

Before we begin, we'd like to submit the following poll. And I'm sure the company would be most grateful for your participation.

I'd now like to hand over to the management team presenting today. Good morning to you all.

Good morning, and thank you, and welcome to our 2025 half year results. I'm Greg Hegarty. I'm the Co-CEO of PPHE. And I'm joined today by Daniel Kos, the Chief Financial Officer; and Robert Henke, our Senior Vice President of Commercial.

We are pleased to announce a solid performance and strong strategic progress in what remains to be a very volatile macro and geopolitical environment in the backdrop. However, before we progress through the presentation, we would just like to show you a short video of our strategic progress this year.

[Presentation]

Thanks, Mark, for playing that video. That video is a summary of some of the key projects that we delivered in the course of this year as well as an outlook on what's ahead.

What we'll do as we go through the presentation, we'll expand upon the work that's gone into launching these new exciting projects as well as our future pipeline and the details that come with that.

To introduce PPHE very briefly, we are a unique company within hospitality real estate. So what makes us unique is that we buy, build and operate hospitality assets where what we see in our sector is that typically companies focus on one element of it. So they buy assets, their own assets or develop or operate. We have everything integrated into PPHE Hotel Group, ensuring that we fully control the value chain.

We have been established since 1989 and have been listed on the London Stock Market since 2007. We're part of FTSE 250. And since December last year, we're included in the EPRA/Nareit Index.

Within our sort of group, we have 51 properties today in operation as well as a number of growth opportunities, consisting of about 16,000 accommodation units, which consists of 10,000 rooms -- hotel rooms and self-catering apartments, and about 6,000 campsite pitches, mobile homes, premium lodges predominantly in sort of the Croatian coastal area of Istria.

Altogether, our portfolio is valued at GBP 2.2 billion. We go through an annual valuation cycle with external valuators and the next set of valuations is due in December.

Within our group, we cover 8 countries, including 7 capital cities where we have a presence today, whereby London and Amsterdam are our key markets in terms of sort of business drivers, growth, demand and so on, but also the real estate value. So the vast majority of the GBP 2.2 billion sits within Central London and Central Amsterdam. We have a compelling pipeline, which we'll touch upon a bit at the end of the presentation.

And the way we sort of market our sort of properties through our management platform is utilizing a number of different commercial brands, which span from upscale select all the way to a luxury lifestyle. So we tap into different segments of the consumer markets.

We have about 4,500 team members that work across our hotels and campsites every single day. And in addition to the accommodation that we provide, we have diversified income streams from meeting and events, for example, where we have well over 250 meeting rooms, including some of London's largest meeting spaces. And we have over 100 food and beverage outlets, i.e., restaurants and bars that we operate.

So if I look at our sort of investment reasons, I have already mentioned that we are unique in the industry by being an operator and owner and developer of assets. So we fully control the entire value chain.

Our focus market is Europe. Europe has very robust hospitality demand patterns throughout sort of the cycles of the world as well and it's predicted to continue to grow in terms of leisure and business travel demand moving forward.

What we do as a business, we like to buy land sites, office blocks or maybe tier hotels and then we invest a new proposition, typically hotels, but also in Croatia, we have taken land sites where we've created holiday villages, so to speak, through the introduction of mobile homes, premium luxury lodges. So we take something that's maybe undervalued, underappreciated, we invest, we develop, we launch and then drive the day-to-day operations and extract the commercial value through refinancing or maybe part selling and then we reinvest in the next growth opportunity.

This business model allows us to grow from within the group without sort of diluting shareholders. And we have multiple sources of capital that we actually are able to tap into to grow the group.

Greg will explain the management platform a bit later, but an additional sort of string to our bow is the fact that we don't need to engage third-party operators. We have all the disciplines in-house that are needed to develop and operate hospitality properties on a daily basis.

This is a cycle which I described. So we buy, we develop, we operate, we extract value and invest in the next opportunity that comes along.

In terms of assets and geographical spread, like I said, active in 8 markets. So that's the U.K., Netherlands, but also in Germany, Croatia, Hungary, Serbia, Austria and most recently, Italy, where we've just opened our first hotel in Rome. Most of the value is within city center locations, predominantly through a sort of freehold ownership base. So of the GBP 2.2 billion, just over GBP 1.6 billion is owned on a freehold basis, and the rest of that value is on a long leasehold and ground rent structure. We have predominantly city center hotels, but we do have elements of sort of leisure in Croatia. In the U.K., Holland and Germany, we do have a presence in provincial cities, but it's a small part of our group. As you can see here, 75% of the value sits within capital cities where demand is strong.

Greg, do you want to explain the operating platform?

Yes. Thank you, Robert. As Robert has already alluded to, we do have an award-winning Hospitality Platform. This is a proprietary in-house model, which allows us to manage all areas under a management agreement, which is unique. It generates both base fees and incentive fees for our properties. We have full expertise of the cycle from development to commercial to general hotel operations. We have access also to the Radisson Hotel Group's distribution system, the loyalty program and purchasing scale whenever we need to yield upon it or drive efficiencies within the business.

This platform is also readily and scalable any time, which gives us, as a business, clear benefits. It allows us to obviously have full operational control of how we operate and manage the business. It also gives us an opportunity to become uniquely aligned with owners and operators. One, obviously, being an owner ourselves, we do actually keep ourselves in tune with -- we are doing management agreements to make sure our expectations for the hotels and the assets are completely aligned.

But most of all, our agreements and our asset knowledge gives us the ability to be -- or have the ability to sell an asset unencumbered in most cases. So that gives us unique flexibility among our other competitors who do operate in the space also.

Moving on to Slide 8. We'll talk about a little bit strategic and operational update. Performance-wise, occupancy was up for the first half. We have started to see normalized rates and travel patterns stabilize as what we've seen in the past, probably going pre-COVID levels. Obviously, post-COVID, we had exceptional growth in average room rates. We are now starting to see some normalization in those travel patterns. However, our revenue was up 4.7% to GBP 199.9 million, predominantly supported by our new and refurbished hotels. Our like-for-like revenue was up 1.3%. However, notwithstanding our EBITDA was down 5.7% to GBP 45.5 million, a little bit impacted by openings of our new assets and partly down to increased payroll costs within our reoperating regions.

I think if you were to look at the U.K. and Pacific, we've done an enormous amount of efficiency measures, where wage inflation was forecast to be circa 7%. We've actually managed to impact -- negatively impact to 4%. This has made us an efficiency gain at EBITDA level to being down like-for-like 4.9%. But Daniel will talk a little bit about that more as we go forward. And I'm pleased to say we have a RevPAR growth of 4% to GBP 109.3.

From a strategic progress point of view, we opened the art'otel Rome Piazza Sallustio in March. We're very proud of that. It's a 5-star asset in Rome, beautiful hotel located near Via Veneto. And the opening of art'otel completed our long investment cycle, the biggest investment cycle the company has had. So we're pleased to say that's now completed and the assets are now open and starting to perform.

At the art'otel London Hoxton, we've also continued with our phased opening of the asset. We launched the 24th floor events space, Panorama. We're also opening this week, going into next, our restaurant and bar on the 25th floor called Solaya. And that's our destination restaurant at this asset.

We also continue to expand our pipeline with a GBP 17.5 million investment into the City of London site on Leaden Street, which will be our first Radisson RED select service hotel in the capital.

We also continue to increase our stake in Arena Hospitality with a GBP 15.5 million investment, taking our share of Arena Hospitality to 65.5%.

We also exited out of a property in Berlin, which has no impact to our EBITDA performance. We exited a lease early and took the opportunity to exit it at this point.

We also acquired a freehold in an adjacent development to our Park Royal Hotel on A40 for GBP 10 million, which generates a yield of 8.3% adjusted. However, we also secured a further planning permission on that site for a 460-key hotel. So very pleased with our continued progress there.

I think the focus going forward is to complete the Hoxton opening, including the restaurant, the bar. And actually, we are also launching 5 floors of Cat A office space, 5,000 square meters at this hotel, which actually leverages our office space with an operating hotel, given the market some unique services, which obviously will help generate the return on that asset.

We also continue to stabilize performance of our new assets such Hoxton and Rome to make sure they deliver their potential. We are continuing to maintain a tight cost control. And we are also continuing to invest in acceleration of tech and automatization within the operating units currently. And most of all, we're starting to roll out our select service brand and making sure our design schemes are aligned to that area. Thank you.

Moving on to future contribution for our pipeline. So as I've alluded to, 5 new hotels launched across 5 capital cities in 2 years, all yet to stabilize. On maturity, we're expected to deliver at least GBP 25 million incremental EBITDA. The art’otel Rome is gaining momentum, and hopefully, as I said, already alluded to in March. However, it is one of the highest performing customer service orientated hotels in Rome, with top scores on Booking.com of 8.6 and Tripadvisor 5 out of 5. We are starting to see strong demand from embassies, corporates and international luxury business travel. So that's Hoxton.

In Hoxton, we opened Panorama. As I've already alluded to, the restaurant is opening next week. And that will help us really solidify that asset as a destination within the Shoreditch area. I'm also proud to say, we teamed up with Michelin-starred chef Kenny Atkinson who operates 2 Michelin stars in northeast of the U.K. and it's his first dabble into the London market. So we're incredibly proud of that. And the offices launch, as I've alluded to, next week.

We also upgraded 2 of our Arena campsites to 4-star hotels through investment in mobile homes and amenities. And as we have already alluded to, we do see a -- with the acquisition of Leman Street in the City of London, being our first select service itself, we forecast that to be a circa GBP 19 million project opening in 2029. That coincides also with our planning permission, which we have on Westminster Bridge Road, which we've already further communicated. However, that will also be a select service Radisson RED operation.

And we already have planning permission for a subterranean hotel on our hotel in Victoria, which is currently going through some minor amendments of that scheme. We look further -- we look forward to further updating you in due course on that. Daniel?

Yes. Thank you very much, Greg. So the group's performance for the first 6 months of 2025 have been quite resilient, particularly given the external headwinds that we've been facing. And these include, obviously, the geopolitical uncertainty worldwide, but also the cost inflation that is facing our industry.

So our reported revenues during the period increased by 4.7% to just shy of GBP 200 million. And on a like-for-like basis, so when we exclude the art’otel Rome and 3 months of the art'otel London Hoxton, revenue was up 1.3% to GBP 193 million.

The stabilizing average room rate that we reported in the first quarter, unfortunately continued into the second quarter and resulted in an overall rate decline of 1.1% in the first 6 months of 2025 to GBP 151.

But I'm quite pleased to say that we managed to offset these impacts of normalizing rates by increasing our occupancy levels with 180 basis points to 72.4% on average.

If we look on a like-for-like basis, average room rates declined by 2.2% and occupancy has increased with 240 basis points to 73%. And this occupancy drive resulted in a 1.4% increase in RevPAR. And on a like-for-like basis, that was 1.1%, driven again by strong occupancy.

If you look at the trends between the separate territories, our major territories really, it was quite mixed. Whereas the Croatian region, which is not obviously the main summer season but the preseason, showed a 10% rate growth and 1.7% occupancy growth. The Dutch region, unfortunately reported the opposite with a 2% rate decline and a 2.5% occupancy decline.

The U.K. region showed the largest occupancy growth of 3.6%, 360 basis points on a like-for-like basis. And we had a record second quarter reporting 88.9% occupancy.

In June alone, we reported 92.4% occupancy in our hotels. That's the level I've never seen before, meaning you're full pretty much on every day and the Sundays are typically a bit slower. However, the U.K. also reported a like-for-like rate decline of 3.7%.

So while occupancy is an important contributor to RevPAR, our margins are very sensitive to the movements in room rate, and obviously, the government-imposed cost inflation. As a result of national minimum wage increases in all territories and a substantial increase in national insurance cost in the U.K., our wage cost growth was expected to reach 7% blended. However, proactive cost control have resulted that this increase could be limited to just over 3% on a like-for-like basis.

So the combination of these trading trends and obviously, the previously announced lower contribution from the art'otel Hoxton meant that RevPAR in the period was down 5.7% to GBP 45.5 million, which was 4.9% lower on a like-for-like basis.

Just to reiterate, approximately 1/3 of our EBITDA is realized in the first half of the year and 2/3 is realized in the second half of the year. So we remain in the second half, very much focused on controlling our costs further, and we're accelerating a few new exciting technology implementations and process automation to drive further efficiencies.

The NAV was up to GBP 28 per share. Obviously, external valuations will be performed at year-end again. The increase in the second -- in the first half was mainly due to foreign exchange results and the acquisition of minority shares.

So on a 12 months rolling basis, our adjusted EPRA earnings per share were GBP 1.19, down from the December number of GBP 1.25. And on that basis, the Board proposes an interim dividend of 17p, which is in line with last year.

We go to the next page. Thank you. So reported a GBP 49.9 million adjusted EPRA earnings for the rolling 12 months ended June '25, which decreased 6.2% versus the GBP 53.2 million in December. On a per share basis, as I said, it's going down to GBP 1.19 per share.

And as you can see in the first waterfall chart, the EPRA earnings were negatively impacted by GBP 3.1 million negative decline in income of the existing estate. This decline is mainly due to the negative contribution of the newly opened art’otel panel, but also obviously, the margin decreases I just alluded to. EPRA earnings are also negatively impacted by the increased finance expenses. And these finance expenses largely increased due to the opening of Hoxton and the opening of Rome this year. So their finance expenses are now fully contributing. The impact of the new openings to EPRA earnings should obviously be temporary with the ramp-up of these properties in the coming year.

Moving on to the next slide of cash flows. In the past 6 months, we reported a free cash flow before expansion CapEx of GBP 21.7 million, and this cash flow was mainly utilized to pay the dividends and to buy out minority shareholders in our listed subsidiary of Arena Hospitality Group and to buy units in the Park Plaza Westminster Bridge. We have nearly come to an end of our substantial CapEx cycle on the most recently opened hotels in Rome and in London with some final payments expected in the months ahead.

So the last 6 months, expansion CapEx also included a GBP 10 million renovation of 2 camps in Croatia, which upgraded the facilities and we added new luxury mobile homes on these sites.

Free cash flow is obviously expected to increase and will be allocated to the company's progressive dividend policy and its expansion CapEx to the new pipeline hotels. Should new minority shares or units be offered, we could allocate free cash flow if these are yield accretive.

Regular bank loan repayments are in line with our debt strategy, which I'll detail on the next slide, Robert.

So we have a very strong balance sheet. Zooming into net position, it's an GBP 890 million gross debt, of which approximately 2/3 is sterling-denominated and 1/3 is euro-denominated. The net debt is GBP 100 million lower, which translates to a conservative 34.5% loan-to-value with the properties at market value.

The bar chart in the middle shows you the maturity profile of the remaining facilities. We currently have an average interest rate of 3.8% and all debt is fixed rate with an average maturity of 3.4 years. This average interest rate is expected to go up slightly with the upcoming refinance round. For the upcoming GBP 250 million refinance round, we have pre-hedged GBP 100 billion already until 2031. This was done early '22 at substantially lower interest rates compared to the current market. So we've already proactively started refinance discussions and received positive feedback so far. So given the low LTV, we expect no issues in the refinance.

Greg, over to you for the outlook.

Thank you, Daniel. So current trading and outlook. City trading in all of our territories remain consistent with what we've seen in half 1. However, we are showing modest improvement and progress in half 2. We do expect ADRs to get towards 2024 levels towards the end of the year. Croatia has delivered a strong summer season. I'm pleased to say, occupancy continues to support RevPAR. However, market remains sensitive to rate shifts and cost inflation, and we are doing what we can to minimize those impacts.

The near-term EBITDA for full year '25 is expected to be broadly in line with 2024, reflecting short-term trading and the phased contribution from the art'otel London Hoxton. Hoxton have been opened and been deliberately phased to maximize its long-term position, resulting in slower initiated profit contributions. The Board reiterates that the recently opened assets are expected to contribute at least GBP 25 million of incremental EBITDA, EBITDA upon stabilization, with time lines expected to optimize long-term value.

Looking ahead, we remain confident in the potential new openings in our pipeline. And at the same time, however, we are mindful of the external macro-economical headwinds from full year '26 onwards, including potential VAT rise in the Dutch region, coupled with business rate pressures coming from the U.K. in 2026, all of which the business is trying to minimize any potential impact to investors. Thank you.

We'll move on to Q&A then.

That's perfect. Thanks, guys. [Operator Instructions] But just while the guys review your questions submitted already, I would like to remind you that recording of this presentation, along with a copy of the slides will be available via Investor Meet Company dashboard.

Robert, as you can see, you've had a number of questions from investors throughout today's presentation. Firstly, thank you to everyone for your engagement. If I may just hand back to you and, of course, where appropriate, read out the questions and give response where it's appropriate to do so.

Thanks, Mark. Daniel, I'll start with you. You mentioned that the anticipated wage cost growth was around 7% and actual impact was 3% through efficiency initiatives. Can you give some examples of what has been worked on and delivered in terms of efficiency and what you expect to see moving forward into the second half?

Yes, we, first of all, focus quite a lot on our back office. We obviously, with 51 properties, we run quite a large back office, and we've adopted quite a few AI use cases to a lot of the repetitive tasks that we do like paying invoices, answering e-mails. And that has led with our natural turnover in staff that we didn't need to re-recruit quite a few staff members on that basis. We've also been looking at clustering hotels and clustering back office even further. And what's on the role are a few software -- very large software implementations. We expect to launch in the second half a fully operated new property management system, front office system, which will make check-in and check-out a lot more efficient and also the communications to our guests will be a lot more efficient. So also from that, I have high expectations that it will be able to drive more efficiencies.

Greg, you summarized the pipeline with land sites and development opportunities in London specifically. Can you give a bit more background which you think will be the first ones to be developed or prioritized at least?

Yes. So obviously, we have an active Board. We have 2 active planning permissions. First is Leman Street. We acquired a site with planning for 200 keys and also an office. So that is currently now being prioritized. We will be opening a select service model. So that is a high standard of accommodation with a number of self-service amenities in the ground floor and like Daniel has already alluded to, with technology.

So we are prioritizing select service growth currently over full service growth. And then followed by Westminster Bridge Road and then we have our site on the A40 as well, which still needs to be planned a little bit more. But we do see Leman Street targeting towards 2029.

All of this has to be funded for, which presumably will be done through sort of further loans. Daniel, you touched on the leverage for the group. With so much development CapEx ahead, what sort of levels of leverage are you comfortable with?

So typically, if we develop a new hotel, so a ground-up development, we typically take loans that are 55% to 60% loan to cost of the project. I'm saying loan to cost because typically, if we complete the development, there is a valuation jump, which typically brings the loan-to-value down to 45%, 50%.

We not only look at LTV. LTV is important for lenders because it kind of gives them the security of the asset backing in prime cities like London and Amsterdam. We also look at yield on debt, if you like. So yield on debt is kind of a cyclical proof KPI, which is the EBITDA divided by the amount of the loan.

So banks typically at the moment are still willing to give you 8.5x, 9x EBITDA. I'm not saying that's where we're going, but that's a level that we are comfortable with. On the coming refinance round, we intend to refinance the existing nominal and so basically go further on with the low LTVs that we're showing.

Continuing on sort of development sort of side, Greg, you mentioned you see a lot of opportunity in select service, with the Radisson RED opening in City of London and other select service developments. Where else do you see sort of opportunities for growth outside of London?

Yes. We are -- will prioritize our current territories with development. I think one the main targets for us is a continued development of Rome. We opened our lifestyle -- luxury lifestyle hotel in art'otel there. We would look to open a Park Plaza in one of our subs. So our development teams are actively looking at this territory, specifically as well as the obvious benefits that we have in all our territories of synergy, management and lenders, et cetera, and on development capability.

So obviously, Rome in Italy is not a target for us. And that's obviously where we are also seeing some really, really good schemes. Not to say that we wouldn't look at other territories. The opportunity was right, but we do see some significant benefits coming out of the Italian region.

Daniel, there was reference earlier to the sort of increased sort of shareholding in Arena. Do you want to summarize the strategy behind it and if you're looking for maybe increasing that stake further?

Yes. So we have no intent to fully privatize Arena. We're very happy with the stock exchange listing. We had a block seller. We firmly believe in the story in Croatia. We firmly believe in the value of Arena. The transaction was yield accretive. So it was more of a capital allocation point, I would say. But again, we have no intent in terms of proactively taking this company private. But we firmly believe in the strategy and the value of that company.

I must also come back to the question, Robert, about what you just said about development. Croatia, our peninsula around Brela and our availability to continue to develop that area is still there. There's still lots of potential value in that peninsula specifically. So as we see, we've upgraded 2 campsites this year. There's more to upgrade. There's more to reposition. So yes, Croatia is also an area of focus for us.

And then the -- obviously, the deliverable for these investments is an increase in EBITDA. The company had set a target of at least GBP 25 million of incremental EBITDA from the new pipeline? On stabilization, do you want to sort of explain, Greg, what stabilization means in our business?

Yes. Typically, when you open an asset or a hotel like we have 2. We have Italy and we have Hoxton. We usually trend down on a 3-year cycle. And usually, at the end of that 3-year cycle, that's what we would then call a property is stable in its market. It's competing with its competitor set, the other hotels within the area. It's had an opportunity to penetrate local corporate and event business to become more established. So that's when you would say actually the hotel is at its peak occupancy and its peak rate premium. We see our assets, predominantly where Hoxton, Rome, et cetera, coming around about end of '28, '29.

That's when you expect these hotels to have stabilized? And then it sounds like there's a lot going on within Hoxton still to help drive that momentum. Can you sort of summarize what is happening within now and the next maybe 12 months within Hoxton?

Yes, absolutely. I mean 357 keys in the Shoreditch market was quite a disruptive force to the competitor set when we opened that. So we were very mindful of how we priced and delivered that hotel. It's a luxury asset. We want to make sure that asset gets the rate premium it deserves for the value of investment we put into it. So we strategically phased the occupancy in line with that to make sure we get the maximum average rate potential.

We've also just completed the 4-bedroom product. We just launched the suite penthouse floor, which is the 23rd floor, 360 panoramic views of London, absolutely stunning. We opened the 24th floor, Panorama, meeting and event facility.

Next week, we are opening Solaya, the destination restaurant with Kenny Atkinson. But most of all, next week, we're taking it to market 5,000 square meters of office space. And that's over 5 floors, Cat A, ready to be let. So we're looking forward to having that launch in the market there as well. So come towards the end of this year, we hope to have the full asset actually driving and actually disrupting that market.

And then a final question, just mindful of time, for you, Daniel. The VAT increase in Netherlands, is that sort of a final, or is that still subject to government sort of decisions or budget decisions?

Yes. So unfortunately, in the Netherlands, we had quite an uncertain political environment with a very lengthy process to get the government. And then when we had a government, this VAT increase was proposed. And then not long after the government tell again. So this VAT increase, so far as we know now is going to be effective in the 1st of January. The Holland has a vote in October. I do not expect any government being formed before 1st of January that could reverse this. So we are anticipating on a VAT increase to 21%, yes.

That's great. Thank you. I think you've addressed all the questions from investors. So thank you once again to everybody for engagement. Guys, I know investor feedback is particularly important to you all, and I'll shortly redirect those on the call to give you their thoughts and their expectations. But I guess before doing so, if I may, Greg, just come back to you for a couple of closing comments. And then, as I say, Ill redirect investors for their feedback.

Yes. Thank you very much. First of all, I'd like to say, thank you for your time, thank you for taking the opportunity to listen to myself, Daniel and Robert. Hopefully, you are a little bit more informed of PPHE, and we are looking forward to the future. Thank you.

That's great. Daniel, Greg, thank you very much indeed, and Robert, for your time this morning. Ladies and gentlemen, if I could please ask you not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order the company can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company.

On behalf of the management team of PPHE Hotel Group, I'd like to thank you for attending today's presentation, and I wish you all the best for the rest of the day.