Manchester Piccadilly Gardens hotel on market for £23m
Legal & General UK Property Fund is seeking a buyer for the former Woolworths building, currently home to a Travelodge, Morrisons, Zizzi, and Nandos.
The 87,400 sq ft block spans seven floors, including a basement, and sits on the corner of Oldham Street and Piccadilly, just opposite Piccadilly Gardens.
The guide price for 19-31 Piccadilly is £23.4m, This represents a net initial yield of 6.5%. However, there are three outstanding rent reviews. These could lead to a revised net initial yield of 7.5%.
Combined, the tenants generate a net rental passing income of £1.6m a year. The weighted average unexpired lease term for the property is 13.3 years, with the earliest breaks being 12.4 years away.
Most of the rental income – 64% – is secured against the 157-room Travelodge. Currently, the hotel has a rent of £6,603 per room.
Metis Real Estate is marketing the property for L&G. The agency noted that Piccadilly Gardens sees an annual footfall of more than 34m people.
When asked about why it put the site up for sale, an L&G spokesperson said: “This sale forms part of the transition to a hybrid investment strategy for the L&G UK Property Fund.
“The strategy continues to provide access to direct UK property, with assets in strong locations across a range of sectors with structural growth potential – such as industrial and self-storage, operational hotels, and build-to-rent residential.”
19-31 Piccadilly sits amid a series of development projects. Piccadilly Gardens itself is set for a refresh, with LDA Design having won a competition last year to reimagine the public park. L&G Investment Management is also delivering a £25m transformation of the space, with work having started in January.
The Travelodge is also not the only hotel in the Piccadilly Gardens pocket.
Criterion Capital has begun work on converting the upper floors of the Royal Buildings into a 187-bed Zedwell hotel.
Cairn Group has secured planning permission to build a refurbish and expand the Gardens Hotel to have a total of 193 bedrooms.
Trafalgar also has permission to build a 129-bed Premier Inn opposite the park.
Looks like a kitchen shop, not a Grand Hotel.
By Anonymous
I don’t think L&G are delivering a £25m transformation. As your article on the Pavilion suggests the works there, whilst very welcome are only a small part of a planned £25m transformation, the bulk of which will be the Council / LDA scheme.
By In the gardens
I would be worried if I were a shareholder in anything connected with L and G Property
Selling core property assets whilst investing in speculative Residential Build to Rent developments does not inspire one looking for decent future returns ! !
By James
It’s a shame the Travelodge didn’t extend in to the former Nat West as was originally proposed
By Steve