City hotel sold for £16m

Mayfair Capital’s Property Income Trust for Charities (PITCH), the top performing specialist property fund for charities over 10 years, has purchased a Premier Inn hotel in Leeds in an off market deal.

The property was acquired from Town Centre Securities (TCS), the property investment, development and car parking company, for £16.08m, reflecting a net initial yield of 4%.

The purpose built hotel was constructed in 2017 and is let to Premier Inn Hotels with an attractive and rare guarantee from its owner, Whitbread Plc, until 2042 with indexed rent reviews. The asset includes 136 bedrooms over eight floors with a bar and restaurant facility on the ground floor.

Since opening the hotel has delivered strong trading results and has been open throughout the pandemic.

TCS, which last week reported a “good recovery” across the business with profits bouncing back, noted that this was a “strategic disposal” and that it would enable it to progress the next phase of development at Whitehall Riverside, having entered into a JV with Glenbrook on the site in January.

Mayfair Capital which has a thematic approach to investing looking to capitalise on long-term structural changes in the economy by identifying drivers of occupational demand across five key areas – change and disruption, connectivity, climate and environment, communities and clustering, and consumers and lifestyle, noted the hotel scored highly across all areas. It was particularly high when looking at climate and environment, connectivity and consumers and lifestyle, with the site having an EPC rating of A and considered a net-zero carbon building with solar panel-based renewable energy production on site and electric vehicle charging points, with the site also close to the Leeds train station – the fourth-busiest railway station in the UK.

Hector Ahern, investment associate, at Mayfair Capital said: “After muted activity in the hotel sector during 2021, the outlook for long let hotels appears to be improving rapidly. As the largest operator with a strong balance sheet, Premier Inn has remained largely stable, with well-located assets and strong fundamentals. It remains the operator of choice for most institutional real estate investors.”

Simon Martindale, fund director of the Property Income Trust for Charities, added: “This asset is an excellent addition to the portfolio which increases the Fund’s weighting to alternatives and provides secure and long income that will rise ahead of inflation. We expect the strong hotel fundamentals and thematic credentials of the asset to underpin performance during the hold period.”

Craig Burrow, development director at TCS, said: “The strategic disposal of this strong investment asset will enable us to progress with the next phase of development at Whitehall Riverside. TCS has a long-term commitment to the regeneration of this key waterside site and continues to work closely with Leeds City Council to maximise its potential. We are looking forward to bringing our future plans to fruition.”

Ben Hall, Partner at NorthCap who acted on behalf of PITCH, said: “We are so pleased to have been able to facilitate this ‘off market’ investment transaction by leveraging our long-standing relationships. TCS were a pleasure to deal with, with both parties doing exactly what they said at the outset. It was great to be able to help Mayfair Capital in securing this superb long let hotel asset in the centre of Leeds.”