L&G buys Kings Cross hotel for £84.5m
Legal & General has exchanged contracts this week to buy Whitbread’s flagship ‘hub by Premier Inn’ hotel in Kings Cross for £84.5m.
The hotel is due to be completed next summer
The post-EU referendum deal demonstrates continued strong demand for high quality, long let property.
The sale price, which is slightly ahead of the £80m guide price, reflects a yield of just under 4% on annual rent of £3.5m.
Whitbread has agreed a 25-year lease agreement on the 389-room hotel, which is currently under construction and due to be completed next summer.
Legal & General has paid £46.5m on exchange and further staged payments will be made during the construction period.
Whitbread finance director Nicholas Cadbury said: “This transaction shows the strength of Whitbread’s covenant and the strong asset backing to our balance sheet as well as our ability to recycle the value we create from our freehold developments into new opportunities.”
BNP Paribas had been appointed to find a buyer for the hotel.
It also advised Henderson Global Investors on the sale of the neighbouring Travelodge London Kings Cross Royal Scot Hotel, which also exchanged in the past week.
William Cheng Kai-man, chairman of Magnificent, said: “We are probably the first company to buy a property in London amid the Brexit overhang.
“The uncertainties [following the EU Referendum] provided the company an ideal opportunity to get into the high-demand hotel sector in London, and the falling currency has made the deal more attractive.
“There are also inherent advantages not related to whether England remains in the EU or not. The cheaper currency will bring more tourists and investors to London, a city that is known for its rich heritage, life style, architecture, asset protection.”