UK Commercial Property REIT (UKCM) has acquired a hotel development opportunity in Leeds, from Marrico Ltd, a joint venture between Marrico LLP and Helios. The site itself was owned by Leeds City Council and UKCM is to fund the development, which is to be completed by Marrico, for a total commitment of £62.7 mln (€74 mln).

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The acquisition is in line with UKCM’s strategy to invest in operational real estate sectors that are expected to deliver resilient rental incomes.
 
The 12-storey hotel will be among the very best in Leeds. It is scheduled to complete in 2024 and will have a 25-year franchise agreement in place with Hyatt Hotels, one of the leading global hotel brands with aspirations to grow its presence within the UK. The hotel will be operated under a lease by Interstate Hotels & Resorts, a leading international hotel operator, with UKCM’s rental income based on the income generated from the operation of the hotel.
 
The 140,000 sq ft (13,000 m2) property will comprise 305 rooms, split between the short stay Hyatt Place and the long stay Hyatt House brands. The upscale hotel will provide meeting rooms, a gym and several food and beverage options, including a rooftop bar with its own dedicated entrance.
 
The development is targeting a BREEAM Excellent rating. UKCM will work closely with both Hyatt and Interstate to ensure the hotel is run in line with all parties’ strong ESG policies and commitments to minimising energy consumption and wastage.
 
Will Fulton and Kerri Hunter, fund managers at UKCM, commented: ‘This is the latest acquisition in line with the company’s strategy to enhance earnings by selective investment in assets where the rents are derived solely from their operational performance. By investing in this way in compelling locations with strong market dynamics and teaming up with strong, reputable tenants we are able to obtain a yield that is at a significant premium to that which would be derived from a traditional leasing model.’
 
UKCM is managed and advised by abrdn and owns a diversified portfolio of high-quality income-producing UK commercial property.
 
AREA acted for UKCM who were further advised by Whitebridge Hospitality. Addleshaw Goddard provided legal representation for UKCM.
 
DLA Architecture, Leeds is the architect for the scheme, Square One Law acted as advisers and legal representative and BNP Paribas as agent for Marrico and Helios.
 
Interstate Hotels & Resorts was represented by Shepperd and Wedderburn.