LondonMetric Property Plc has acquired nine Premier Inn hotels for £89 million ($120 million USD) as part of a sale and leaseback transaction with Whitbread PLC. The acquisition was announced by LondonMetric and expands its existing exposure to the Premier Inn brand.
The portfolio is let on new 30-year leases and reflects a net initial yield of 5.3 percent, which is expected to compound over the lease term. The hotels generate an annual rent of £5.0 million, with rent reviews linked to CPI every five years. According to the announcement, the assets show strong levels of rent cover.
The hotels are mature and purpose-built properties comprising a total of 955 bedrooms. They are primarily located in the South East of England and include sites at Southampton Airport and Kings Langley and Milton Keynes and Poole and Colchester and Fareham and Waltham Abbey and Chipping Norton and Warwick.
Following the transaction, Whitbread has become LondonMetric’s fourth largest occupier. Through the Premier Inn brand, Whitbread now contributes £11.3 million of annual rent to LondonMetric, representing 2.7 percent of the company’s total rental income.
The acquisition follows a previous hotel portfolio purchase by LondonMetric from Whitbread valued at £44 million. With the completion of this latest transaction, LondonMetric now owns 22 Premier Inn hotels.
“This transaction adds high quality and mission critical assets that generate a long, strong and growing NNN income in a sector that continues to benefit from evolving consumer preferences for travel, entertainment and experience. It follows on from our recent £44 million hotel portfolio acquisition from Whitbread and increases our ownership to 22 modern Premier Inn hotels,” said Andrew Jones, Chief Executive of LondonMetric.
The hotels will continue to operate under the Premier Inn brand. No changes to branding, lease structure or operational use were disclosed as part of the announcement.