Whitbread completes sale and leaseback of two operational hotels

Whitbread has successfully completed the sale and leaseback of two trading Premier Inn hotels in Westminster, Central London, and Oxford city centre. 

It comes as a 30-year term with five yearly CPI reviews was offered for both hotels, having achieved a net initial yield of 4.25% and returned £56m for the group. 

Sale and leasebacks are one way Whitbread can utilise its asset-backed balance sheet to support the future growth of the business. 

In its UK estate, 56% of operational Premier Inn hotels are owned by Whitbread, a portfolio which was valued at between £4.9bn and £5.8bn in 2018.

According to the group, there is the potential for a 45% growth in its network from a little under 86,000 UK bedrooms currently to a long-term room potential of 125,000 rooms across UK and Ireland. 

Whitbread is on track to offer its customers a choice of 98,000 UK rooms by 2030 based on the company’s committed and future development pipeline, including a programme of extensions to select established hotels and restaurants.

Mark Anderson, managing director for property and international for Whitbread, said: “We have a once in a decade opportunity to grow our business here in the UK and take advantage of structural shifts in the hospitality market. As we continue to expand, we are thinking creatively about how we utilise Whitbread’s large and majority owned estate to our best advantage.

“This large network of freehold properties underpins Whitbread’s covenant strength and provides us many competitive advantages, including the ability to recycle capital back into the business through the sale and leaseback of a select number of our trading hotels.”

He added: “As we deliver our new five-year plan for the business, I can see us exploring similar opportunities in the future to fuel our network growth and fund investments elsewhere in the company that will help to extend our market leading position.”