Legal & General Property has bought Mitchells & Butlers’ headquarters and associated hotel on Fleet Street and Lionel Street in central Birmingham from La Salle Investment Management for £69.5m – a 3.94% yield.
The acquisition was made on behalf of L&G’s LPI (Limited Price Inflation) Income Property Fund.
The grade-A office building was purpose built for Mitchells & Butlers in 2003 and extends to 95,000 sq ft. It is let in its entirety to Mitchells & Butlers for 35 years from January 2009 with RPI-linked rental increases.
The property has three levels of basement car parking, comprising 278 spaces, together with a 120-bedroom Ibis Styles hotel, which was rebranded and refurbished in 2014.
Derek Gilby, senior fund manager at Legal & General Property, said: “The first major regional city centre office asset for the fund, we believe that Birmingham is set to benefit from a number of significant infrastructure projects already under way and the asset is well positioned to gain from the regeneration of the adjacent Paradise area, which is undergoing a rapid transformation.”
JLL acted for LaSalle Investment Management on the deal, while CBRE advised Legal & General Property.
