Whitbread completes the sale and leaseback of two operational hotels
Whitbread PLC, the UK’s largest hospitality business and owner of Premier Inn, has successfully completed the sale-and-leaseback of two trading Premier Inn hotels.
The two hotels achieved a net initial yield of 4.25% across the two properties and returned £56 million for the business. A 30-year term with five yearly CPI reviews (0-4%) was offered for both hotel properties which are in Westminster, Central London, and Oxford City Centre.
Sale and leasebacks are one way Whitbread can utilise its asset backed balance sheet to support the future growth of the business. In its UK estate, 56% of operational Premier Inn hotels are owned by Whitbread, a portfolio which was valued at between £4.9bn and £5.8bn in 2018.
As the hospitality sector continues to evolve in its core UK market, Whitbread believes there is the potential for a 45% growth in its network from a little under 86,000 UK bedrooms currently to a long-term room potential of 125,000 UK & Ireland rooms.
It is on track to offer its customers a choice of 98,000 UK rooms by 2030 based on the company’s committed and future development pipeline, including a programme of extensions to select established hotels and restaurants.
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. As we continue to expand, we are thinking creatively about how we utilise Whitbread’s large and majority owned estate to our best advantage.
“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.
“The strong demand from investors for the two Premier Inn hotels we recently brought to market demonstrates how well-regarded Whitbread-operated hotels are with investors looking for secure, long-term, inflation-linked income.
“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.”
The operational sale and leasebacks were completed on the 137-bedroom hub by Premier Inn London Westminster St James’s Park in Central London and the 90-bedroom Premier Inn Oxford Westgate hotels in September 2024. Both hotels occupy excellent locations within their respective markets.
Clients of CBRE Investment Management (CBREIM) acquired the hotels. Gerald Eve acted for Whitbread and CBREIM were represented by Lewis Ellis and CBRE on the assets in Westminster and Oxford, respectively.
