LONDON (Alliance News) - Hospitality firm Whitbread PLC Thursday said it has exchanged agreements with Legal & General Group PLC for the sale and leaseback of its 389-room 'Hub by Premier Inn' hotel in Kings Cross, due to open in 2017, in exchange for a 25-year lease agreement.
Whitbread launched plans in April this year to carry out sale and leaseback deals during 2016 to generate between GBP100.0 to GBP150.0 million.
Under the deal announced Thursday, Legal & General will pay a total of GBP84.5 million in cash for the property, making an initial payment of GBP46.5 million. The balance will be settled through staged payments during the construction period and the final payment will be made on completion in 2017.
Whitbread said the sale price produces a net initial yield of just under 4.0% against an annual rent of GBP3.5 million.
"This transaction shows the strength of Whitbread's covenant and the strong asset backing to our balance sheet as well as our ability to recycle the value we create from our freehold developments into new opportunities," said Nicholas Cadbury, finance director of Whitbread.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Legal & General (LGEN)
Whitbread (WTB)
