£63m deal for city centre hotel development
UK Commercial Property REIT (UKCM) has acquired a hotel development in Leeds city centre from Marrico (Sovereign Street) a JV between Marrico and Helios.
The site which was owned by Leeds City Council will be developed by Marrico into a 12-storey hotel to be operated by Interstate Group under the Hyatt brand, with development funded by UKCM.
The hotel is described by UKCM as aiming to be among the very best in Leeds, a city which has “excellent central amenities but an under-supply of quality hotels”, the site will have a 25 year franchise agreement with Hyatt Hotels which is looking to grow its presence within the UK market.
The 140,000 sq ft property which is targeted to complete in 2024 will comprise 305 rooms, split between the short stay Hyatt Place and the long stay Hyatt House brands. The hotel will also feature meeting rooms, a gym and several food and beverage options, including a rooftop bar with its own dedicated entrance.
Speaking of the acquisition which is inline with UKCM’s strategy to invest in operational real estate sectors that are expected to deliver resilient rental incomes, fund managers Will Fulton and Kerri Hunter said: “This is the latest acquisition in line with the company’s strategy to enhance earnings by selective investment in assets where the rents are derived solely from their operational performance. By investing in this way in compelling locations with strong market dynamics and teaming up with strong, reputable tenants we are able to obtain a yield that is at a significant premium to that which would be derived from a traditional leasing model
“Not only will this hotel benefit from a significant supply-demand imbalance of quality accommodation in Leeds and be operated by one of the world’s leading international hotel firms, it is also designed to be future fit with strong ESG credentials and a flexible split between short and long stay brands, as well as external food and beverage options to vary the asset’s offering and maximise its income potential.”
Trevor Cartner of Helios added: “This is the last available site at Sovereign Square and we have commissioned a suitably impressive building to complete the development. The hotel will be a fantastic addition to the Leeds market which we believe will continue to grow. Our investment will sit alongside UKCM’s for the medium term so the hotels success will determine ours.”
DLA Architecture, Leeds is the architect for the scheme, Square One Law acted as advisers and legal representative and BNP Paribas as agent for Marrico and Helios.
Law firm Addleshaw Goddard advised UK Commercial Property REIT on the deal. Lucy Sturrock led the property team supported by Hayley Maxwell and Katie Millner on construction.