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Premier Inn receives £56 million in two-hotel, sale-and-leaseback deal

Both hotels are in England, in the cities of London and Oxford

One of the two hotels that Whitbread PLC sold in a sale-and-leaseback deal is the 90-room Premier Inn Oxford Westgate. (Whitbread PLC)
One of the two hotels that Whitbread PLC sold in a sale-and-leaseback deal is the 90-room Premier Inn Oxford Westgate. (Whitbread PLC)

Whitbread PLC has further reduced its owned hotel portfolio with the sale-and-leaseback of two of its core hotels in England.

The deal includes the 90-room Premier Inn Oxford Westgate, in the university city of Oxford, and 137-room Hub by Premier Inn London Westminster St. James’ Park in Central London. In a news release, Whitbread said the deal “achieved a net initial yield of 4.25% across the two properties and returned £56 million ($73 million) for the business.”

The two hotels are both on 30-year leases with five yearly consumer price index reviews with a range of between 0% and 4%.

Whitbread is a preferred owner for its Premier Inn hotels but is ready to tweak its portfolio if value can be released and reinvested back into the business, its executives said.

It did not reveal the name of the buyer in the initial release but has subsequently confirmed it is clients of CBRE Investment Management (CBRE IM). Gerald Eve acted for Whitbread and CBRE IM were represented by Lewis Ellis and CBRE on the assets in Westminster and Oxford, respectively.

Mark Anderson, Whitbread's managing director, property and international, said the company has a golden opportunity, a “once-in-a-decade opportunity” to “grow our business here in the U.K. and take advantage of structural shifts in the hospitality market. As we continue to expand, we are thinking creatively about how we utilize Whitbread’s large and majority owned estate to our best advantage.”

In the U.K., Whitbread owns 56% of its portfolio but is activity seeking ways to use its asset-backed balance sheet to support growth.

In 2018, the portfolio of operational Premier Inn hotels that Whitbread owned was valued at between £4.9 billion and £5.8 billion. It currently has more than 800 hotels in the U.K.

Speaking to HNN at the beginning of October, Simon Ewins, Whitbread’s managing director for U.K. hotels and restaurants, said the firm has a vision of growth of up to 125,000 hotel rooms in the U.K.

Its first target is to reach 98,000 rooms by 2030.

“It is a virtuous circle. Constantly, we learn about what makes hotel postcodes and micro-markets successful, and we do not think any other hotel firms think that way. That allows us to build product with consistency. We own most of the portfolio, and we operate all of it,” he said.

(This article was updated to included the buyer and the real estate advisers.)

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