Specialist commercial property investment manager Orchard Street Investment Management has completed the acquisition of two hotels in Newcastle City Centre from Union Property Development for £38 mln (€42 mln).
The transaction, made on behalf of St James’s Place UK, comprises the acquisition of the Travelodge Quayside hotel and the forward funding of a Melia hotel development. The combined purchase price reflects a net initial yield of 4.50%.
'These acquisitions provide a strong foothold in Newcastle’s hotel market and, with the hotels benefiting from high-quality covenants and long lease terms with minimum rental uplifts, the assets will provide stable income returns for our client,' said Harry Buxton, acquisitions manager at Orchard Street.
The Melia development is due for completion in the summer of 2020 and will comprise a hotel with 161 rooms across seven floors, operated by Melia’s innside brand. It has been pre-let for a term of 25 years and will be subject to 5-yearly inflation-linked rent reviews.
The adjacent Travelodge Quayside hotel opened in November 2017 and comprises a 120-room hotel across five floors, prelet to Travelodge for 25 years.
Orchard Street was advised on the transaction by Whitmarsh Holt Young whilst the seller was advised by Lambert Smith Hampton.
