UK: A 620-key hotel and aparthotel complex with Staycity and Premier Inn as tenants will open in London’s Paddington in 2021.
M&G has acquired the long leasehold interest of the development site and will finance the construction of the hotel complex to be carried out by development consortium, Concierge 3 Limited (a joint venture partnership between The Pickstock Group, Staycity and BSW Land & Property Ltd). The capital is provided by the £4.1 billion M&G Secured Property Income Fund, which invests in UK real estate assets let on long-term leases, usually with rents that increase in line with inflation.
Under the terms of the deal, Whitbread plc, the owner of Premier Inn and Staycity will each take 30-year leases on five yearly inflation-linked rent reviews, operating independently with 60 per cent and 40 per cent of the rooms respectively. The scheme also has provision for a 27,000 square foot education facility, landscaping and open space.
Staycity will operate a Wilde Aparthotels by Staycity property consisting of studios and one-bedroom apartments.
Kevin Vickers, investment director at M&G Real Estate, said: “Business travellers continue to seek well-connected and affordable central London accommodation. The £2 billion invested in Paddington in recent years has predominantly been invested in office and residential developments, positioning this hotel and aparthotel transaction as an attractive investment opportunity. 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.”
Tom Walsh, CEO of Dublin-based Staycity, said: “We are delighted to be part of this exciting development opportunity. Paddington Station is London’s gateway to the West and is just 15 minutes from Heathrow Airport. As well as being a burgeoning business area, leisure visitors can enjoy two royal parks within walking distance, the picturesque Little Venice and great links to London’s Notting Hill and the West End.”
