Legal & General Property has purchased the freehold interest in the Mitchells & Butlers HQ offices and associated hotel situated on Fleet Street and Lionel Street in Central Birmingham.

Legal & General Property has purchased the freehold interest in the Mitchells & Butlers HQ offices and associated hotel situated on Fleet Street and Lionel Street in Central Birmingham.

The properties have been acquired for a total of £69.5 mln (€98 mln) from LaSalle Investment Management, reflecting a net initial yield of 3.94%.

The deal was carried out on behalf of Legal & General Property's LPI (Limited Price Inflation) Income Property Fund.

The Grade A office building was purpose-built for Mitchells & Butlers in 2003 and comprises 95,000 sq ft (8,825 m2). The property also benefits from three levels of basement car parking, comprising 278 spaces, together with a 120-bedroom Ibis Styles Hotel which was rebranded and refurbished in 2014.

The building is let in its entirety to Mitchells & Butlers for 35 years from January 2009.

'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,' said Derek Gilby, senior fund manager at Legal & General Property.

Launched in 2010, the LPI Fund invests in property with primarily government-backed, inflation-linked sources of income. It has £675 mln of assets under management.

JLL acted for LaSalle Investment Management on the deal, while CBRE advised Legal & General Property.