Whitbread agrees £51 million sale and leaseback of 7 Premier Inns

Hotel and restaurant group Whitbread has agreed a sale and leaseback deal of seven of its Premier Inn and joint restaurant sites in a deal worth £51 million.

The group will sell the properties to NFU Mutual and Standard Life Assurance Limited, who will then enter into 25-year leases with Whitbread, which will continue to operate the sites.

The deal represents a net yield on the seven hotels of just under 5.3 per cent, said Whitbread.

According to the company, the price of £51 million represents a profit over book value, as of 29th November 2012, of £19.6 million and is 95 per cent of the 2007 valuation of the individual properties.

"This sale and leaseback is a continued evolution of our overall funding portfolio, and follows our successful 2011 US private placement and bank refinancing," said Nicholas Cadbury, group finance director of Whitbread PLC.

"The significant book profit is a useful reminder of the value we create from our freehold developments and the strong asset backing to Whitbread's balance sheet."

The seven hotels involved in the deal represent a total of close to 600 rooms and include sites at Exeter, Lancaster and Norwich airport.

Whitbread, one of the biggest sources of hotel recruitment in the UK, has adopted a wider strategy to free up cash from its Premier Inn estate, of which this latest move is part.

It follows two previous sale and leaseback deals over the past two years worth a total of almost £90 million and involving 12 of its Premier Inn sites.

However, the group, which employs over 40,000 people globally, is also planning to significantly extend its Premier Inn portfolio in the UK over the coming years, as well as that of its other flagship brand, Costa Coffee.

Whitbread hopes to increase the number of Premier Inn UK rooms to at least 65,000, up from 50,000 currently, by 2016, as well as add 80 to 100 new restaurants and to nearly double the size of its Costa operation.

Berkeley Scott is a specialist recruitment agency providing hospitality employment solutions