Knight Frank has been appointed to sell the 274-room Leonardo Hotel at St James Gate in Newcastle city center on behalf of a British investment fund.
The seller is seeking offers of £31.8 million for the hotel, which is let to Leonardo Hotel Management (UK) Limited for the next 14.4 years at a temporary rent of £2,888,054 per annum.
The former Jury’s Inn was renamed and renovated in 2022 and is one of 52 Leonardo Hotels in the UK and Ireland – owned by the Fattal Hotel Group.
Selling for £31.8m, the buyer can expect a running yield of around 8.5% this year, rising to 9.86% in 2028 and 11.05% in 2033.
Charlie Fletcher, partner at Knight Frank, expects there to be a lot of interest: “This is a well-located, recently rebranded hotel in the city center, within walking distance of Newcastle Central Station and operated by a well-known international brand. The investment is attractively priced and is clearly supported by the vacancy value at the offer price.”
Newcastle has been one of the UK’s best-performing hotel markets post-pandemic, with revenue per available room in 2022 more than 15% higher than in 2019. With an average daily rate of £69, Newcastle has the lowest ADR of all regional markets. present an attractive offer for inexpensive overnight stays.
Due to rising inflation, ADRs increased significantly across the UK, however Newcastle was the only market among all comparable cities to see an increase in occupancy. In 2022, occupancy was 74.2% compared to 73.2% in 2019.
Dickon Wood, Capital Markets Partner at Knight Frank in Newcastle, added: “Newcastle has almost 8,500 hotel rooms and has seen only modest room supply growth over the last five years, with very limited supply growth forecast for the next five years, so this is Asset.” Space and potential in the market are very secure.”