Failure by easyHotel to gain planning permission to extend a hotel in London means that the building may have to be sold.
The super budget chain announced today that it had lost an appeal against Islington Borough Council’s refusal of retrospective planning permission for 78 of 162 rooms at the hotel in Old Street.
“In light of this outcome, easyHotel is now considering its options, including a sale or partial sale of the building to release capital to fund future higher yielding development projects,” the company said.
“The net book value of the property is £13 million and the board is confident that the current realisable value of the building is significantly in excess of this.
“Each option, if pursued, is likely to result in a short term adverse impact to earnings in the current financial year and during the period whilst the capital released is deployed in higher yielding assets.”
The property was originally acquired by easyHotel in 2012 for £10 million as a 92-room hotel, two years before the company’s Initial Public Offering (IPO).
The hotel was extended in March 2014 to 162 bedrooms but without planning permission.
“This retrospective planning application was identified and communicated as a potential risk at the time of the IPO in June 2014 and was inherited by the current management team in 2015,” easyHotel said.
“This retrospective planning application relating to the additional 78 bedrooms was rejected by Islington Council in June 2016 and, since then, the board has worked closely with Islington Borough Council to come to a beneficial solution for both parties, but has been unsuccessful as the planning inspectorate has upheld the council’s policy to protect office space in the borough.
“The board is confident a full sale of the building should fund the development of at least 500 new rooms in the UK.
“A partial sale, which would entail the concentration of the hotel operations on the ground, first and second floors, with a sale of the upper floors, would finance the development of a further 170 rooms in the UK.