12th May 2022, London - BNPPRE has advised Sovereign Square, a joint venture between Marrico Asset Management and Helios Real Estate, on a funding deal to bring forward a £62.7m hotel on a prominent site adjacent to the railway station in Leeds city centre.
The forward funding deal with UK Commercial Property REIT Ltd (UKCM) will see a 305-bed hotel operated by Interstate Group, under the Hyatt brand. The site itself was owned by Leeds City Council and UKCM is to fund the development, which is to be completed by Marrico.
The 12-storey hotel will be among the very best in Leeds, a city with excellent central amenities but an under-supply of quality hotels. It is scheduled to complete in 2024 and will have a 25-year franchise agreement in place with Hyatt Hotels, one of the leading global hotel brands with aspirations to grow its presence within the UK.
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.
Richard Dunhill, Head of Leeds Office at BNP Paribas Real Estate commented: “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.”
Simon Williams, Head of National Markets at BNP Paribas Real Estate added: "This transaction was another example of our locally based teams working with our London based Investment specialists to add value for our clients and get innovative transactions done – I am very proud of our collaborative culture bringing together local opportunity with a detailed knowledge of where capital is looking to deploy."
Richard Bland of Marrico said: "The acquisition is in line with UKCM's strategy to take exposure to operational real estate sectors that are expected to delive resilient rental incomes. The hotel will be operated under a lease by Interstate Hotels, a leading international hotel operator, with UKCM's rental income based on the income generated from the operation of the hotel."
Trevor Cartner of Helios added: "This is the last available site at Sovereign Square and we have commissioned a suitably impressive building to complete the development. The hotel will be a fantastic addition to the Leeds market which we believe will continue to grow. Our investment will sit alongside UKCM's for the medium term so the hotels success will determine ours."
Will Fulton and Kerri Hunter, Fund Managers at UKCM commented: “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.”
