Super budget hotel brand EasyHotel has lost an appeal against Islington Borough Council’s refusal of retrospective planning permission relating to 78 of the 162 rooms at its Old Street hotel.
EasyHotel is now considering a sale or partial sale of the building to release capital to fund future higher yielding development projects.
The retrospective planning application was identified and communicated as a potential risk at the time of the Initial Public Offering (IPO) in June 2014 and was inherited by the current management team in 2015.
The property was originally acquired by EasyHotel prior to IPO, in June 2012 for £10m as a 92-bedroom hotel. In March 2014 the hotel was extended to 162 bedrooms without planning permission.
Retrospective planning application relating to the additional 78 bedrooms was rejected by the council in June 2016.
The company said its Board has “worked closely” with the 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 company statement said: “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.
“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.”
EasyHotel owns hotels in Glasgow, Croydon and Birmingham, as well as the Old Street branch, with a committed pipeline of hotels in Liverpool, Manchester, Ipswich, Sheffield and Barcelona (owned), Leeds (subject to planning consent), and Belfast and Reading (franchised). It also put the leasehold for its Ipswich site on the market earlier this year for £140,000.
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