M&G Investments is financing the development of a £203m hotel and aparthotel scheme in Paddington, which is let to Premier Inn owner Whitbread and Staycity Group.
M&G has bought the long leasehold interest for the 620-room scheme and will fund construction. It will be built by Concierge 3, a joint venture between The Pickstock Group, Staycity and BSW Land & Property.
The site will open in 2021. Capital for the site will be drawn from M&G’s £4.1bn Secured Property Income Fund, which invests in UK property let on long-term leases with inflation-linked income.
Staycity will provide studio and one-bed spaces under its premium brand, Wilde Aparthotels. Whitbread will provide a 373-bedroom Premier Inn hotel, marking its debut in Paddington.
Whitbread and Staycity will both take 30-year leases on five yearly inflation-linked rent reviews, respectively operating 60% and 40% of the rooms.
The scheme also has provision for a 27,000 sq ft education facility, landscaping and open space.
Comfortable investments
Kevin Vickers, investment director at M&G Real Estate, said: “London is one of Europe’s best performing hotel markets and is expected to account for more than a third of the pipeline of new aparthotels in the UK and Ireland market by 2021.
“The increase of high-profile operators entering the market and the availability of operating data is enabling investors to become more comfortable with investing into the sector.”
Jonathan Langdon, acquisition manager for Central London at Whitbread, said: “We’ve been exploring opportunities to invest in Paddington for some time now and are very excited at the prospect of gaining a presence for Premier Inn there.”
The investment is the fund’s fifth transaction with Whitbread as a tenant, following a £100m funding deal to develop a 339-room hub by Premier Inn hotel on Tothill Street, Westminster. This added to its existing portfolio of Premier Inn hotels at Gatwick Airport North Terminal, Holborn and Wandsworth.
To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette
