Schroder Real Estate Investment Trust (SREI) has announced that it has exchanged a conditional agreement for Lease, with Premier Inn Hotels, for a pre-letting of a new 96 bedroom hotel within Arndale House in Leeds (pictured). SREI acquired the Arndale Centre in Leeds, a multi-let retail, leisure and office property totalling 125,834 sq ft that is located in Headingley, in January 2014 for £16.6m (reflecting a net initial yield of 9.18% per annum). The trust’s strategy was to generate income growth from asset management and explore change of use. Arndale House is a substantially vacant office building, within the Arndale Centre complex, that comprises 32,000 sq ft over seven floors, which on acquisition produced a net rental income of £45,000 per annum.
The Agreement for Lease is conditional on the Company securing planning consent and converting Arndale House to hotel use, including the addition of a new floor, at a cost of approximately £6.7m. Subject to these conditions being satisfied, Premier Inn will enter into a new 30 year lease, with a tenant only break option after 20 years, at a rent of £412,800 per annum with an initial six month rent free period. The lease is to have five yearly upwards only rent reviews linked to the Consumer Price Index (‘CPI’), subject to a cap of 4% per annum compound. The lease will be guaranteed by Premier Inn’s parent company, Whitbread Group PLC. The target date for completion of the lease is November 2016.
Schroder Real Estate signs pre-let to Premier Inn for Arndale House in Leeds : SREI