Hospitality group Whitbread has agreed the sale and leaseback of its yet-to-open Hub by Premier Inn hotel at King's Cross, London with Legal and General.
The 389-bedroom hotel, which is due to launch in 2017, is being sold for £84.5m, in exchange for a 25-year lease agreement.
Legal and General has paid £46.5m on exchange, with the remaining £38m being paid during the rest of the construction period and upon completion of the hotel in June next year.
The sale price will produce a net initial yield of around 4% against £3.5m annual rent.
Nicholas Cadbury, group finance director of Whitbread PLC, said: "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."
Whitbread currently owns 65% of its 700-plus Premier Inn estate as freehold properties, while the remainder of the hotels are leasehold. As announced in April, Whitbread is planning to carry out sale and leaseback transactions on a number of its hotels, involving proceeds of £100m to £150m.
The King's Cross hotel is set to become the largest Hub by Premier Inn hotel, of which there are currently five. They feature bedrooms which are more compact in size that the traditional Premier Inn.
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