UK’s largest hospitality company Whitbread has finalized the sale-and-leaseback of two operational Premier Inn hotels.
The two properties, situated in Westminster, Central London, and Oxford City Centre, were sold on a 30-year lease with five-yearly reviews linked to the Consumer Price Index (CPI). The transaction yielded a net initial yield of 4.25% and generated £56 mln (€67 mln) for the company.
The sale-and-leaseback transactions for the 137-room Premier Inn London Westminster St James’s Park and the 90-room Premier Inn Oxford Westgate were completed in September 2024. Both hotels are situated in highly desirable locations within their respective markets.
The hotels were acquired by clients of CBRE IM. Gerald Eve acted as advisors to Whitbread, while Lewis Ellis and CBRE represented CBRE IM on the transactions for the Westminster and Oxford properties, respectively.
Mark Anderson, managing director for Property and International for Whitbread, said: ‘We have a once in a decade opportunity to grow our business here in the UK and take advantage of structural shifts in the hospitality market. This large network of freehold properties underpins Whitbread’s covenant strength and provides us many competitive advantages, including the ability to recycle capital back into the business through the sale and leaseback of a select number of our trading hotels. As we deliver our new five-year plan for the business, I can see us exploring similar opportunities in the future to fuel our network growth and fund investments elsewhere in the company that will help to extend our market leading position.’
Whitbread leverages sale-and-leaseback transactions as a strategic tool to optimize its asset-backed balance sheet and support future growth. Currently, 56% of the company's UK Premier Inn hotels are owned by Whitbread, with an estimated valuation between £4.9 bn (€5.9 bn) and £5.8 bn (€6.9 bn).
As the UK hospitality sector continues to evolve, Whitbread envisions a 45% expansion of its network, increasing the number of UK rooms from approximately 86,000 to 125,000. The company is on track to achieve 98,000 UK rooms by 2030 through a combination of new hotel developments and extensions to existing properties.
