Legal & General Property (“LGP”), on behalf of its LPI (Limited Price Inflation) Income Property Fund (the “Fund” / “LPI Fund”), has purchased the freehold interest in Mitchells & Butlers HQ offices and associated hotel situated on Fleet Street and Lionel Street in Central Birmingham. The properties have been acquired for a total consideration of £69.5m from LaSalle Investment Management, reflecting a net initial yield of 3.94%.
The high spec, Grade A office building was purpose built for Mitchells & Butlers in 2003 and extends to 95,000 sq ft. The property also benefits from three levels of basement car parking, comprising 278 spaces, together with a 120 bedroom Ibis Styles Hotel which was rebranded and refurbished in 2014.
The building is prominently located within the Birmingham CBD, positioned opposite the new Paradise Circus, one of the UK’s most significant mixed used development schemes, which is destined to significantly enhance the City’s commercial offering and extend its core. It is let in its entirety to Mitchells & Butlers for 35 years from January 2009.
Derek Gilby, Senior Fund Manager at Legal & General Property, comments: “The first major regional city centre office asset for the Fund, we believe that Birmingham is set to benefit from a number of significant infrastructure projects already underway and the asset is well positioned to gain from the regeneration of the adjacent Paradise area which is undergoing a rapid transformation. Mitchells & Butlers offers the fund a strong tenant covenant, providing secure, inflation-proofed income over a long lease term, yet with the benefit of market rental upside.”