LXi REIT buys another Premier Inn – LXi REIT has exchanged contracts to forward purchase the new Premier Inn hotel currently under construction at Wilson Street, Middlesbrough. The purchase price is GBP6.2 million, reflecting a net initial yield of 5.1% (net of acquisition costs).
They have 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 December 2017. LXi is not assuming development risk or funding the construction works.
The property has 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 GBP7.1 billion and the UK’s largest hotel, restaurant and coffee shop operator, with more than 68,000 hotel rooms across over 750 hotels. Whitbread Group PLC is the tenant’s guarantor under the terms of the lease.
The lease 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 Prices Index (collared and capped at 0% p.a. and 4% p.a. compound).
The property is being purpose-built for the tenant and will comprise of a six storey, 83 bedroom hotel. They say that it is well located on Wilson Street in the centre of Middlesbrough, with good access to the A66 dual carriageway, town centre shopping and Middlesbrough Football Club’s Riverside Stadium.
The acquisition is being funded from their Scottish Widows debt facility.
Portfolio update
- The building works have now completed for the Premier Inn and Beefeater in Whitley Bay, in relation to which the Company had previously exchanged on a conditional basis. The acquisition of this property has also now completed.
- Planning permission has now been granted for the Swindon property pre-let to Travelodge, Starbucks and Subway, in relation to which the Company had previously exchanged on a conditional basis. Completion of the acquisition will take place shortly.
- Planning permission has now been granted for the Bradford property pre-let to Aldi, Home Bargains, Heron Foods and Starbucks. Completion of this acquisition will take place shortly.
- LXi has now completed on the acquisition of the Travelodge in Ipswich.
- Construction works are progressing well and on schedule in relation to the forward fundings of the property in Melksham, pre-let to Travelodge, Starbucks and Greggs, and the property in Cramlington, pre- let to GE Oil & Gas group.
Simon Lee, Partner of LXi REIT Advisors Limited, commented: “We are pleased to be forward purchasing this new and well-located Premier Inn hotel, which will provide the Company with a long, inflation-linked income fully underpinned by the strong Whitbread PLC and Premier Inn covenants.”
LXI : LXi REIT buys another Premier Inn