London Pension Fund Authority, managed by Knight Frank Investment Management (KFIM), has forward funded the development of a mixed-use Travelodge hotel and restaurant scheme in St Albans, Hertfordshire. KFIM has paid developer Reef Estates a total of €27.4m (£24.4m) for the completed asset, reflecting a blended net initial yield of 4.38%. Practical completion of the project is expected in Q3 2020.
Situated on the north side of St Albans city centre, the scheme incorporates a 130-bedroom hotel, let to Travelodge on a new 35-year lease, and ground-floor retail space, the majority of which is let for 20 years to Youngs & Co Brewery.
Richard Lines, partner and head of Gerald Eve’s alternatives capital markets team, said: “St Albans is a market that has an under-supply of hotel rooms, especially at the price-point Travelodge offers, and this scheme will go some way to meeting this demand. The development is a key example of alternative uses being found for struggling high street properties. The vacant BHS store will make way for the new development, which will inject life into the immediate area surrounding St Peters Street.”
John Styles, partner and Fund Manager for LPFA said: “The investment will provide very attractive long secure income streams to balance more active management risks in other parts of the LPFA portfolio and completes the investment of a €336.8m (£300m) allocation made in June 2016.”