Legal & General Retirement (LGR) has completed the acquisition of a 389-bedroom hotel being developed by Premier Inn in King鈥檚 Cross, London, for 拢84.5 mln (鈧�101 mln).
The 25-year lease is guaranteed by Whitbread Group, the FTSE-100 hospitality business, and provides a net initial yield of 4% against an annual rent of 拢3.5mln.
LGIM Real Assets, which includes the Legal & General property investment business, acted for LGR, which is one of Legal & General's three major asset-based businesses. LGR was responsible for 拢43.4 bn of annuity assets at end-December 2015.
LGR has made an initial payment of 拢46.5 mln to Premier Inn, with further staged payments planned during the construction period until completion of the hotel during 2017.
The development, which also includes a restaurant and three ground floor retail units, is located on York Way in the heart of King's Cross and immediately adjacent to King's Cross station. It is also a short walk to St Pancras, providing travel connections to the UK and Europe. King's Cross has undergone significant regeneration over the past decade.
The hotel will be operated as a hub by Premier Inn, a new format offering compact rooms in central locations with a concentration on connectivity and technology, appealing to both business and leisure travellers.
Kerrigan Procter, managing director of LGR, said: 'King鈥檚 Cross is one of the UK and Europe鈥檚 most successful regeneration stories. Soon to be the European home of Google, the area is a creative hub for business, has a thriving cultural scene and features top restaurants, not to mention connections nationally and internationally. It is this social and economic infrastructure which helps to underpin our long-term investment.'
Knight Frank advised LGIM Real assets on the deal, while BNP acted for Premier Inn.
