UK Commercial Property REIT (UKCM) has acquired a hotel development opportunity in Leeds for £62.7 million.
The REIT purchased the property from Marrico (Sovereign Square) Ltd, a joint venture between Marrico LLP and Helios.
The site itself was owned by Leeds City Council. UKCM is to fund the development which will be completed by Marrico.
The 12-storey hotel is scheduled to complete in 2024 and will have a 25-year franchise agreement in place with Hyatt Hotels.
The hotel will be operated under a lease by Interstate Hotels & Resorts, an international hotel operator, with UKCM’s rental income based on the income generated from the operation of the hotel.
The 140,000 sq ft property will comprise 305 rooms, split between the short stay Hyatt Place and the long stay Hyatt House brands. The upscale hotel will provide meeting rooms, a gym and several food and beverage options, including a rooftop bar with its own dedicated entrance.
The development is targeting a BREEAM Excellent rating and will have a positive impact on the local community with the creation of a number of new jobs. UKCM will work closely with both Hyatt and Interstate to ensure the hotel is run in line with all parties’ strong ESG policies and commitments to minimising energy consumption and wastage.
The hotel is located on Sovereign Square in central Leeds, in a prime position adjacent to the city’s main railway station and in close proximity to a number of high-quality office developments with long term corporate occupiers.
Leeds is one of the UK’s fastest growing cities and is the main driver of a regional economy that is forecast to grow by 21% over the next ten years, with financial and business services set to generate over half of GVA growth over that period.
Will Fulton and Kerri Hunter, Fund Managers at UKCM, commented: “This is the latest acquisition in line with the company’s strategy to enhance earnings by selective investment in assets where the rents are derived solely from their operational performance. By investing in this way in compelling locations with strong market dynamics and teaming up with strong, reputable tenants we are able to obtain a yield that is at a significant premium to that which would be derived from a traditional leasing model.
“Not only will this hotel benefit from a significant supply-demand imbalance of quality accommodation in Leeds and be operated by one of the world’s leading international hotel firms, it is also designed to be future fit with strong ESG credentials and a flexible split between short and long stay brands, as well as external food and beverage options to vary the asset’s offering and maximise its income potential.”