UK fund plans to turn a Westminster office into a hotel

Photo courtesy of Gettys (Westminster London)

UK-based M&G Investments has purchased a former London office building to turn into a hotel for its for its £3.3-billion long-lease M&G Secured Property Income Fund. The fund will support the development of a 339-guestroom hub by Premier Inn in Westminster at 21 Tothill Street. The property, which is expected to open by the end of the year, will be rented to Premier Inn on a 25-year lease with five-yearly rent reviews.

The transaction complements the Fund’s existing portfolio of Whitbread Group assets, which includes Premier Inn hotels at Gatwick North Terminal, Red Lion Street, Holborn, and Wandsworth in south west London. 

“This investment will provide our clients with a high quality, inflation-linked cash flow,” Ben Jones, manager of the fund, said, adding that the location of the hotel will help improve its ROI. 

Pension funds and insurance companies, Jones said, are looking for secure long-term investments to match their liabilities.

Premier Inn is looking to have 85,000 guestrooms open by 2020.