Investment firm backs new 150-bed York hotel

Lothbury Investment Management, on behalf of Lothbury Property Trust, is to fund a development of a new Malmaison boutique hotel in York which will have a value of £44m once complete.

The new hotel, which is a redevelopment of a 1960s landmark building previously known as Yorkshire House, is on Rougier Street. The hotel will provide 150 bedrooms and a new rooftop ‘sky bar’ providing stunning views over York.

The scheme will have a development value of £44m reflecting a net initial yield of 4.54%. Malmaison have agreed to a 35 year lease with RPI-linked rent reviews every five years, between 0% and 4%.

Mark O’Mullane, from Lothbury Investment Management, said: “This is a major investment which provides almost-certain rental growth in line with inflation. It also increases Lothbury Property Trust’s exposure to the hotel sector, which fulfils a longstanding objective to acquire another hotel asset to complement our existing Edinburgh hotel. It also improves the average weighted unexpired lease term of the Fund.”

Development is commencing in the spring, with completion scheduled for Q2/Q3 2019. Yorkshire Ventures will act as development manager.

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