Development Securities today announces the acquisition of the Royal York Buildings in the centre of Brighton for £4.5 million (approx. € 5.45 million) from an Administrator acting on behalf of a bank.
The Grade II listed Royal York Buildings are vacant and comprise 45,600 ft² (approx. 4,236 m²) . of space that includes the former 51-bed Royal York Hotel. The property also includes nine serviced apartments and 3,400 ft² (approx. 315 m²) of retail and amenity space.
Planning consent has been secured for a change of use with respect to the hotel space, to create a 180-bed youth hostel. Simultaneously, a 100-year lease has been signed with the YHA at a commencing rent of £200,000 per annum subject to five-yearly RPI indexation with the first tenant break at 30 years. The remaining space presents several options for asset management and enhancement in order to add value, and in the near-term, the serviced apartments will be refurbished and let.
After the expiry of a short rent-free period, the hostel and serviced apartments will produce an expected income return of 7.32%.
Matthew Weiner, Director, Development Securities PLC said: "The Royal York Buildings are a strong addition to our investment portfolio with the YHA already having been secured as an anchor tenant. The building is well-located in the center of Brighton and in addition to the new youth hostel, offers further asset management opportunities to create an attractive and vibrant leisure destination in this prominent location."
Source: Development Securities