The Board of LXi REIT has announced that:
- the Company has exchanged contracts to forward purchase the new Premier Inn hotel and Beefeater restaurant currently under construction at Spanish City Promenade, Whitley Bay, North Tyneside (the “Premier Inn Property”); and
- the Company has now completed on the acquisitions of the GE Oil & Gas facility at Cramlington, Northumberland and the Travelodge hotel at Haverhill, Essex, the exchanges of which were announced on 10 March 2017 and 22 March 2017, respectively.
The acquisitions are being funded from equity resources, with senior debt finance expected to be introduced in the near term.
Premier Inn hotel and Beefeater restaurant, Whitley Bay
The purchase price for the Premier Inn Property is GBP6.26 million (excluding purchaser’s costs), reflecting a net initial yield of 5% on the asset acquisition.
The Company has paid the vendor a 10% deposit with the balance of the price to be paid on completion of the purchase. Completion of the purchase will occur following practical completion of the building works, which is scheduled for early June 2017. The Company is not assuming development risk or funding the construction works.
The hotel and restaurant have both been fully pre-let to Premier Inn Hotels Limited, the principal hotel trading company of Whitbread PLC, a FTSE 100 company with a market capitalisation of GBP7 billion and the UK’s largest hotel, restaurant and coffee shop operator, with more than 68,000 hotel rooms across over 750 hotels.
The lease, which covers both the hotel and restaurant, will run for a term of 25 years from completion of the building works, with a one-off tenant break right at the end of year 20. The rent is subject to five yearly upward only reviews index-linked to the Consumer Price Index (collared and capped at 0% p.a. and 4% p.a. compounded).
The Premier Inn Property is being purpose-built for the tenant and will comprise of a three storey, 68 bedroom hotel and adjoining single-storey 190 cover Beefeater restaurant.
The Premier Inn Property is well located at Spanish City Promenade in Whitley Bay, a seaside town on the north-east coast in the County of Tyne and Wear, approximately eight miles east of Newcastle. It is situated at the southern end of Whitley Bay beach, overlooking the beach and promenade and immediately adjacent to the historic Spanish City Dome.
Simon Lee, Partner of LXi REIT Advisors Limited, commented: “We are pleased to be forward purchasing this new Premier Inn hotel and Beefeater restaurant at an attractive yield. The hotel and restaurant sectors are performing very well and the property, which represents our fifth acquisition since listing on 27 February, will provide the Company with a very long, inflation-linked income fully underpinned by the strong Premier Inn covenant. We are also at an advanced stage on the acquisition of a number of additional forward funding and built assets, across a wide range of property sectors, which meet the Company’s investment objective and which should exchange shortly.”
LXI : LXi building portfolio