Whitbread PLC, the owner and operator of the Premier Inn and Hub by Premier Inn brands, has acquired the freehold interest of an 89,722-square-foot office building in London that it intends to convert into a Premier Inn hotel, according to a news release from the firm.
The price tag is 56.5 million pounds sterling ($69.13 million), and the seller is London-based Orchard Street Investment Management, on behalf of St. James’s Place Wealth Management Group LLP.
New London House, the office which also contains retail and restaurant offerings, is at 6 New London St. in the City of London, the capital’s financial center.
Whitbread said it “intends to seek planning consent from the City of London Corporation to repurpose and extend the current building into a hotel-led, mixed-use development with a mix of complementary uses ... [and] with new public spaces. ”
The building, which was developed in 1977 and comprises a podium and tower structure, is located adjacent to Fenchurch Street station in the heart of London’s financial district. According to CoStar data, it was last sold by Aberdeen Asset Management in May 2015 for 25.2 million pounds sterling.
Paul Norman, managing editor in Europe at CoStar News, reported office-conversion deals like this one are rare, although the City of London is looking into relaxing planning-permission rules to "encourage alternative uses for secondary buildings increasingly at risk of obsolescence."
“The City of London’s appeal as a business and leisure destination continues to underwrite our investments in new hotel developments in the Square Mile,” said Jonathan Langdon, senior acquisition manager at Whitbread PLC, referring to the City of London’s nickname.
Mark Anderson, managing director of property and international at Whitbread, added there is a structural shift in the London office market, presenting opportunities to acquire office buildings that are no longer fit for occupier and investor purposes and to reposition and refurbish them into successful hotels.
“Our strong balance sheet, plentiful liquidity and ability to buy and develop freehold property, which is rare in our sector, leaves [us] very well-placed to take advantage of this structural shift,” he said.