prime hotel investment premier inn - mk2... premier inn // 1-6 waterloo street // birmingham // b2...

Prime Hotel Investment

PREMIER INN1-6 Waterloo Street // Birmingham

Index Linked with Whitbread PLC Guarantee

www.mk2.co.uk 2Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG

> Birmingham is the UK’s second city and attracted a record 37.2million visitors in 2016.

> 100% prime location at the corner of Waterloo Street and Temple Row over looking St Philips Cathedral in the heart of the Commercial Business District.

> 152 bed hotel over ground and 7 upper floors together with reception, ground floor bar / restaurant and ancillary accommodation.

> Freehold.

> Let to Premier Inn Hotels Limited and guaranteed by Whitbread Plc on an FRI lease expiring on 18th May 2035 with a tenant’s break on 19th May 2030.

> Current rent of £1,166,795 per annum equating to £6,557 per bedroom after allowing for a rent on the ground floor bar / restaurant of £170,000 per annum equating to £40.00 per sq ft GIA.

> The rent is reviewed every 5 years to the Consumer Price Index upward only and capped at 5.00% with the next review on 18th May 2020. Adopting Bank of England Forecasts for CPI we estimate the reversionary rent to be £1,295,507 per annum.

> Terms agreed to vary the lease to provide 20

years terms certain on purchaser’s payment of tenant incentive. Further details on request.

> For the year ending March 2016 Whitbread reported turnover of £2.291 billion, pre-tax profit of £495 million and net worth of £2.655 billion.

> We are instructed to seek a offers in excess of £23,000,000 (Twenty Three Million Pounds)

subject to contract and exclusive of VAT, reflecting a net initial yield of 4.75% and an estimated reversion in 2020 to 5.28% after the deduction of purchaser’s costs of 6.75%.

A rare opportunity to purchase an exceptionally well located prime hotel, index linked and secured to a FTSE 100 company.

INVESTMENT SUMMARY

OFFERS IN EXCESS OF

£23,000,000NET INITIAL YIELD

4.75% REVERSION IN 2020

5.28%

PRIME LOCATION IN THE HEART OF THE COMMERCIAL BUSINESS DISTRICT


The wider West Midlands conurbation has a population of 2.5million and 4.3million people of working age live within a 1 hour drive of the city.

With a GDP of £110 billion Birmingham has the largest concentration of businesses outside of London. There are over 75,000 companies including 1,200 international businesses located in the area and a vibrant business and financial services sector employing over 100,000 which is expected to grow by 30% by 2020.

Recently voted the most popular destination outside of London for meetings, conferences and events, Birmingham is home to the National Exhibition Centre, Barclaycard Arena, International Convention Centre and Symphony Hall and accounts for 40% of the UK’s conference and exhibition trade.

Over 37.2million people visited Birmingham in 2016 an increase of 12% since 2006 with almost 1 million international visitors.

is the UK’s second city with a population of circa 1.1 million and is considered one of the youngest in Europe with under 25’s accounting for 40% of the population.

BIRMINGHAM

40%OF THE UK’SCONFERENCE ANDEXHIBITION TRADE

25,000GRADUATES

PER YEAR

UK’S LARGEST REGIONAL ECONOMY OUTSIDE LONDON

// BIRMINGHAM TOWN HALL

// LIBRARY OF BIRMINGHAM

// THE BULL RING

// THE ICC

BIRMINGHAM HAS RECENTLY BEEN NAMED THE UK’S MOST INVESTABLE CITY AND THE SIXTH BEST IN EUROPE

www.mk2.co.uk 4Premier Inn // 1-6 Waterloo Street // Birmingham

Birmingham is located 117 miles from Central London and 70

miles from Manchester. It is a highly accessible City. In particular

it benefits from superb access by air, rail and road:

COMMUNICATIONS

AIR

Located 8 miles to the south east of the City, 11 minutes by train, Birmingham International Airport (BHX) is the third largest outside of London with over 50 airlines providing connections to 143 destinations in Europe, North America, Asia and the Middle East and is expected to handle around 15million passengers a year by 2020. In excess of £300million has been invested in the airport over the last 10 years including a runway extension doubling capacity and enabling it to directly compete with London Heathrow and Manchester for long haul flights to China, India and the West Coast of America.

ROAD

Birmingham benefits from easy access to the A38M, M6, M5, M42 and M40 Motorways. Typical drive times are as follows:

London 2 hours 32 minutes

Heathrow Airport 2 hours 11 minutes

Manchester 1 hour 41 minutes

Leeds 2 hours 11 minutes

Bristol 50 minutes

Edinburgh 5 hours 15 minutes

Solihull 20 minutes

MIDLAND METRO

The Midlands Metro Light Rail Transport System connects Wolverhampton to Birmingham’s City Centre (Snow Hill Station). At a cost of £127million the Metro has been extended through the city centre to Grand Central Station with further extensions planned for Brindleyplace, Edgbaston and Digbeth.

RAIL

Developed at a cost of £650million the recently opened Grand Central replaces New Street station increasing capacity to 140,000 passengers daily, 52million a year. At the heart of the UK rail network the station provides direct intercity access to London Euston, Manchester, Reading, Bristol, Nottingham, Leicester and Newcastle. The NEC and Birmingham International Airport can be reached in just 11 minutes.

Phase 1 of High Speed 2 rail (HS2) has now been granted Royal Assent and will connect London and Birmingham by 2026 with a new dedicated city centre terminus station at Birmingham Curzon Street. Phase 2 of the project will connect Birmingham with Manchester and Leeds, placing the City at the heart of the new national high speed network.

NEW YORK

DUBAI

DELHI

BARCELONA

KUALA LUMPUR

SYDNEY

SHANGHAI

OSAKATOKYO

CANCUN

FLORIDA

TORONTO

HAMBURG

NICE

MADRID

MONTEGO BAY

GENEVA

COPENHAGEN

BEIJING

SHARM EL SHEIKH

HONG KONG

PARIS

MANCHESTER86 MILES

LEEDS118 MILES

LONDON101 MILES

LIVERPOOL98 MILES

NOTTINGHAM51 MILES

LEICESTER43 MILES

NORTHAMPTON54 MILES

BRISTOL98 MILES

SHREWSBURY47 MILES

BIRMINGHAM

EDINBURGH292 MILES

SHREWSBURY

WOLVERHAMPTON

STAFFORD

STOKE-ON-TRENT

LICHFIELD

BIRMINGHAM

COVENTRY

WORCESTER

HEREFORD

TO BRISTOL& SOUTH WEST

TOLONDON

TO LONDON& SOUTH EAST

TO MANCHESTER& NORTH WEST

TO LEEDS& NORTH

EASTOSWESTRY

MARKET DRAYTON

TELFORD

BRIDGNORTH

BISHOPS CASTLE

LUDLOW

LEOMINSTER

ROSS-ON-WYE

LEDBURY

GREAT MALVERN

KIDDERMINSTER

STOURBRIDGEDUDLEY

WALSALL

BURTON-UPON-TRENT

UTTOXETER

TAMWORTH

NUNEATON

SOLIHULL

REDDITCH

EVESHAM

STRATFORD-UPON-AVON

WARWICK

RUGBY

LEEK

M6

M6

M6 TOLL

M69

M1

M42

M40

M5

M50

M54

M1

M1

£650mGRAND CENTRAL


According to Marketing Birmingham this helped create an extra 2,100 jobs with visitor numbers increasing 12% since 2006. Birmingham is the only city outside of London to have all six leading department stores; John Lewis, House of Fraser, Debenhams, Selfridges, Harvey Nichols and M&S.

Birmingham has been voted the most popular destination outside of London for meetings, conferences and events for six successive years by the annual British Meetings & Events Industry Survey. With facilities such as the National Exhibition Centre and the International Convention Centre the city accounts for around 40% of the UK’s conference and exhibition trade and each year hosts over 850 events.

Birmingham stages more World and European sporting Championships than any other UK City. The recent £20.6 million refurbishment of the Barclaycard Arena and the £12.5million spent improving the Alexander Stadium the home of UK Athletics has further enhanced the offer. In addition, the city has Five Michelin starred restaurants more than any other English city outside of London and is famous for it’s 100+ Balti houses attracting 20,000 visitors a week.

In 2016 Birmingham attracted a record 37.2 million visitors of which nearly 1 million were from overseas making it the UK’s 4th most visited city.

VISITOR ECONOMY

FIVEMICHELIN STARRED

RESTAURANTS

// GREAT WESTERN ARCADE

THE CITY ACCOUNTS FOR AROUND 40% OF THE UK’S CONFERENCE AND EXHIBITION TRADE AND EACH YEAR HOSTS OVER 850 EVENTS.

// SELFRIDGES

// GERMAN MARKET, VICTORIA SQUARE

// JOHN LEWIS


55 COLMORE ROW

GRAND CENTRAL/

NEW ST STATION

RADISON BLU HOTEL

THE MAILBOX

THE CUBE/ HOTEL

INDIGO

ST PHILLIPS CATHEDRAL

VICTORIA SQUARE

BIRMINGHAM TOWN HALL

GRAND HOTEL

STAYBRIDGE SUITES

PREMIER INN BIRMINGHAM

BULL RING SHOPPING CENTRE

EXCHANGE BUILDINGS

HOTEL DU VIN

SNOW HILL STATION

JOHN LEWIS

PARADISE DEVELOPMENT

SELFRIDGES


Less than 5 minutes walk from both Grand Central and Birmingham Snow Hill train stations and close to New Street the centre of Birmingham prime retail zone. Surrounded by high quality office developments nearby occupiers include Natwest / RBS, Eversheds, Lloyds Bank, Government Office for West Midlands, together with high quality bars and restaurants including Gusto, Alchemist, Botanist, San Carlo, Pure Bar, Ask, Viva Brazil and Nosh and Quaff.

CAVENDISHHOUSE

BENNETTSCOURT

SOMERSETHOUSE

UNIONCHAMBERS

IMPERIALHOUSE

ST PHILLIPSPOINT

ST PHILLIPSCATHERDRAL

35

3737a

7

6

54

32

1

102104

85 to 89

79 to 83

78 to 90

98

41

3837

3635

34 38

42 to 44

5 to

7

3

11 t

o 1

29

to 1

08

1112

14

2324

2533

78

6

5

2 1

48

10 t

o 1

213

14

3439

4041

4243

4548 67 to 71 65 63

25

32

55 to 59

WATERLOO STREET

BENN

ETT’S HILL

TEMPLE ROW

TEM

PLE

STR

EE

T

NE

ED

LESS

ALL

EY

NEW

CANN

ON

PASSAGE

TEMPLE RO

W W

EST

Very prominently located at the corner of Waterloo Street and Temple Row overlooking St Philips Place, in the heart of the Central Business District.

SITUATION

IN THE HEART OF THE CENTRAL BUSINESS DISTRICT


The hotel is accessed from a prominent ground floor reception off Waterloo Street comprising a reception desk, automated check in machines and managers office. Two 13 person lifts and a central staircase provide access to the hotel rooms.

The 7 upper floors are of similar design with a central corridor, laundry chute, linen rooms and two additional fire escape staircases serving the hotel rooms. All of the rooms are on-suite, air conditioned, with secondary glazing providing a mixture of double, single rooms and fitted out to Premier Inn’s brand standards. There are 7 disabled access rooms, one on each floor.

The large basement area provides basic storage accommodation. Lower ground floor has access from Temple Passage via concertina metal doors to a loading / bin store area which has one disabled car parking space. This floor serves both the hotel and bar / restaurant providing linen wash room, staff room, staff lockers, janitors cleaning room, beer store/cellar, dry store, freezer and chiller rooms, additional managers offices and customer toilets for the bar / restaurant.

The Beefeater Block restaurant and bar has recently been refurbished and provides an extensive glazed frontage with canopy to Waterloo

Street together with separate entrance adjacent to the hotel reception. Internally the property has a clear floor to ceiling height of 3.5 metres with a part tiled, part wood floor with exposed ceiling and air conditioning around a central bar area. Seating provides for 80 covers and to the rear is a kitchen and food preparation area with a lift providing access to the lower ground floor storage areas. There is a second access door from Waterloo Street (not used) together with a staircase to the lower ground floor to access the male and female customer toilets.

A full suite of building warranties relating to the original refurbishment can be made available to the purchaser.

Fully refurbished in 2010, the property extends over basement, lower ground, ground and 7 upper floors to provide 152 high quality bedrooms together with a ground floor bar / restaurant. The adjacent Fumo restaurant is held on a long leasehold interest.

DESCRIPTION

FULLY REFURBISHED IN 2010, THE PROPERTY EXTENDS OVER BASEMENT, LOWER GROUND, GROUND AND 7 UPPER FLOORS.

www.mk2.co.uk 10Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PGwww.mk2.co.uk 10

Basement Basic storage space

Lower Loading area / Bin store /

Ground Disabled car parking space /

Linen wash room / Staff room /

Janitors cleaning room /

Beer store / Dry store /

Freezer/ Chiller / Managers

offices / Customer toilets

Ground Hotel Reception /

Beefeater Block

– Bar & Restaurant

Floor 1 21 Rooms (1 DDA)







Total 152 rooms

BASEMENT LEVEL

LOWER GROUND FLOOR

GROUND FLOOR

TYPICAL UPPER FLOORS

Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG

The property comprises the following areas;

ACCOMMODATION

The ground floor bar and restaurant has been measured on a gross internal area (GIA) basis and provides 4,234 sq ft (393.3 sq m) of accommodation.


The rent is reviewed every 5 years upward only to the Consumer Price Index (CPI) subject to a cap of 5.00% per annum compounded. There is a tenant’s break clause on 19th May 2030 on giving 12 months written notice.

Terms have been agreed with the tenant to vary the lease to provide a 20 years term certain. In return the purchaser will pay a tenant incentive and reduce the CPI cap from 5.00% to 4.00% per annum compounded. Further details on request.

The current rent of £1,166,795 per annum equates to £6,557 per bedroom after allowing for a rent on the ground floor bar / restaurant of £170,000 per annum equating to £40.00 per sq. ft. GIA.

The ground floor Fumo restaurant is let on a 999 years long leasehold interest from 3rd April 2009 at a peppercorn rent.

Let on full repairing and insuring terms for 25 years to Premier Inn Hotels Limited with a Whitbread PLC guarantee from 19th May 2010 at a current rent of £1,116,795 per annum.

TENANCY

Premier Inn is the UK’s largest hotel chain with 730 hotels and over 64,000 bedrooms trading across the UK and Ireland and a further 10,000 new rooms planned by 2018. Like for like sales increased 9% in 2016.

Premier Inn Hotels Limited has an Experian credit rating of 100 described as very low risk and a credit limit of £9,500,000. Their most recent accounts are summarised as;

£000S 3 MARCH 2016 26 FEB 2015 27 FEB 2014

Turnover 743,195 374,540 288,681

Pre-tax Profit 255,471 149,056 75,494

Net Worth 931,147 717,374 636,984

TENANT INFORMATION

PREMIER INNWhitbread Plc is the UKs largest hotel, restaurant and coffee shop operator in the UK employing 50,000 people and is a FTSE 100 company. Incorporating some of the best known brands in hospitality the group includes

Costa Coffee, Hub by Premier Inn, Beefeater Grill, Table and Table and Brewers Fayre. Also enjoining an Experian Credit rating of 100 and a credit limit of £10,00,000 their accounts are summarized as;

£MILLIONS 3 MARCH 2016 26 FEB 2015 27 FEB 2014

Turnover 2,921.8 2,608.1 2,294.3

Pre-tax Profit 495 463.2 342.8

Net Worth 2,655.4 2,071.4 1,695

TENANT INFORMATION

WHITBREAD PLC


Major new brands including Gusto, Alchemist, Cosy Club, Botanist, Viva Brazil, Pure Bar, Adams are now established with Gaucho and Los Iguinos due to start trading in the next few months. Demand has resulted in strong rental growth and deals of note include;

The Birmingham CBD has seen significant numbers of high profile bar / restaurant openings in recent years.

Investor demand for well let index linked prime hotel investments remains very strong with a lack of good quality product reaching the market, particularly up and built stock. This has resulted in yield compression over the last 12 months. Deals of note include;

BARS & RESTAURANTS HOTEL INVESTMENT MARKET

MARCH

2017Under offer to a major restaurant brand at a rumoured £55.00 per sq ft.

FORMER AUSTIN REED UNIT TEMPLE ROW WEST

JANUARY

2017Ground floor with basement, under offer to a Tai Restaurant at £41.50 per sq ft.

7-8 WATERLOO STREET

SEPTEMBER

2016Let to Damascena at £44.50 per sq ft.

5-7 TEMPLE ROW WEST

SEPTEMBER

2016Let to Byron Burgers ar £72 per sq ft.

92-93 NEW STREET

JUNE

2016Let to Gusto at £35.00 per sq ft.

THE GRAND HOTEL COLMORE ROW

Based on the above evidence we are of the view that the Beefeater Block bar and restaurant has an estimated rental value of £170,000 per annum equating to £40.00 per sq ft GIA.

BRIDLE PATH, WATFORD 124 Beds. Full Forward Funding on a 25 years lease with break at 20 to Premier Inn Hotels Limited.

TOTHILL STREET, WESTMINSTER339 Beds Hub by Premier Inn. Forward commitment on a 25 years lease guaranteed by Whitbread Plc.

ROYAL ARSENAL GARDENS, WOOLWICH 128 rooms. Full forward funding on a 25 years lease with a break at 20 to Premier Inn Hotels Limited .

EXCHANGE BUILDINGS, BIRMINGHAM 140 rooms part of a larger mixed use scheme. Let to Premier Inn Hotels Limited on a 25 years lease with break at 20.

WINDSOR ROAD, SLOUGH131 rooms. 25 years with a break at 20 to Premier Inn Hotels Limited.

Under offer at circa

£13.8 million

£101.925 million

£21.2 million

£42.75 million

£13.2 million

4.70%initial yield

3.96%initial yield

4.05%initial yield

4.50%initial yield

4.50%initial yield

MARCH

2017

DECEMBER

2016

MARCH

2016

JANUARY

2016

JANUARY

2016


CONSUMER PRICE INDEX FORECAST According to the latest Bank of England inflation report, Consumer Price Index growth has increased substantially in the last three quarters and is currently running at 2.4% pa. The fall in the value of sterling and the associated pressures on import costs, food and fuel prices is leading to an upward trend in inflationary pressure in the UK economy. The Bank of England has a target of 2.00% per annum CPI, however, their actual forecast for the next few years is as follows;

Based on these figures we estimate that the rent at review in May 2020 will increase to £1,295,507 per annum.

CAPITAL ALLOWANCES The property was original funded utilising Business Premises Renovation Allowances (BPRA) and therefore there are no remaining capital allowances available on the property.

VAT The property is elected for VAT and therefore VAT will be payable on the purchase price however we anticipate that the transaction will be structured by way of a TOGC.

ENERGY PERFOMANCE CERTIFICATE The property has an EPC rating of C-53. A copy of the EPC is available upon request.

TENURE Freehold.

2018

2.70%2019

2.60%2020

2.40%

We are instructed to seek a offers in excess of £23,000,000 (Twenty Three Million Pounds) subject to contract and exclusive of VAT, reflecting a net initial yield of 4.75% and an estimated reversion in 2020 to 5.28% after the deduction of purchaser’s costs of 6.75%.

FINANCIALS

OFFERS IN EXCESS OF

£23,000,000NET INITIAL YIELD

4.75% REVERSION IN 2020

5.28%

MK2 Real Estate Limited

Maddox House

117 Edmund Street

Birmingham B3 2HJ

Mark Rooke

T: 0121 2141972

M: 07985 877578

E: [email protected]

Mark Johnson

T: 0121 2141977

M: 07748 105812

E: [email protected]

For further information or to arrange a viewing please contact;

IMPORTANT INFORMATION

1. No description or information given by MK2 Real Estate Ltd whether or not in these Particulars and whether written or verbal (“information”) about the property or its condition or its value may be relied upon as a statement or representation of fact. MK2 Real Estate Ltd do not

have any authority to make any representations and accordingly any information given is entirely without responsibility on the part of the agent or the seller. 2.These particulars do not constitute, nor constitute part of, an offer or contract, nor shall they merge in any offer or contract

which may hereafter be made between the sellers or lessors and the recipient of the information. 3.The photographs show only certain parts of the property at the time they were taken. Any areas measurements or distances given are approximate only. 4. Any reference to alterations

to or use of any part of the property is not a statement that any necessary planning, building regulations or other consent has been obtained.These matters must be verified by any intending buyer. 5. Any buyer must satisfy themselves by inspection or otherwise as to the correctness

of any information given.

Designed and produced by Diablo: www.diablodesign.co.uk May 2017

prime hotel investment premier inn - mk2... premier inn // 1-6 waterloo street // birmingham // b2...

Documents