Institutional investor acquires Birmingham hotel in £26.55m deal

Premier Inn, Waterloo Street, Birmingham

A Birmingham city centre hotel has changed hands in a £26.55m deal.

The sale of the Premier Inn in Waterloo Street sets the new benchmark for regional hotel yields. It is also the latest in a series of hotel deals in the area.

The 152-bed budget hotel has been acquired by Standard Life Assurance from a syndicate of private investors represented by Downing.

The institutional investor fought off strong competition in order to secure the deal.

Niche property consultancy MK2 Real Estate advised the vendors.

Mark Johnson, a director of MK2, said: “The price reflects a net initial yield of 4.12%. By agreeing a 20-year lease extension with Premier Inn on sale we were able to achieve maximum value for the asset and our client.

“The sale attracted lots of interest with a number of institutional investors competing to secure the deal and bidding significantly ahead of the asking price. This demonstrates confidence in Birmingham and the booming hotel sector.”

Premier Inn, which occupies 1-6 Waterloo Street, is in the heart of the city’s business district. It is let to Premier Inns Hotels Ltd – with a guarantee from parent Whitbread – until 2037. The 152-bedrooms are over seven floors, with a ground floor reception and the recently refurbished 80-seat Beefeater Block bar/restaurant.

Formerly a tired office building, the premises was acquired eight years ago and converted into a hotel by Cannock Developments, on behalf of the Downing investors.

BNP Paribas advised Standard Life on the acquisition.

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