Business

McAleer & Rushe sell Newcastle hotel investment for £32.7m

The four-star Maldron Hotel in Newcastle city centre, due to open in March 2019, has been sold by McAleer & Rushe for £32.7 million
The four-star Maldron Hotel in Newcastle city centre, due to open in March 2019, has been sold by McAleer & Rushe for £32.7 million The four-star Maldron Hotel in Newcastle city centre, due to open in March 2019, has been sold by McAleer & Rushe for £32.7 million

CO Tyrone developer and contractor McAleer & Rushe has sold a planned new four-star Maldron Hotel in Newcastle city centre to UK Commercial Property Trust Limited (UKCPT), which is advised by Standard Life Investments, for £32.7 million on a forward funding basis reflecting a market investment yield of 4.99 per cent on completion.

The six-storey hotel, due to be completed in March 2019 by McAleer & Rushe, is let on a 35-year FRI lease to Dalata, Ireland’s largest hotel operator and forms part of McAleer & Rushe’s wider £75 million mixed use regeneration scheme in the city.

Alongside the hotel, the project also includes a 575-student bed accommodation which will be operated by the Unite Group and ancillary retail units.

The 265 bed hotel will be Dalata's first Maldron brand operation to be opened in England and includes an extensive bar, restaurant and business meeting facilities, which will provide a major boost to the Newcastle economy.

The development is strategically located on Newgate Street at the heart of Newcastle city centre on the site of the former Newgate shopping centre and is close to Newcastle United's St James’ Park and the Eldon Square Centre.

Stephen Surphlis, property director at McAleer & Rushe, said the deal represents a significant transaction within the UK hotel investment sector and highlights the confidence and strong interest in the regional cities, particularly for hotel investments with long term income streams let to major brands such as Dalata.

He added: “The new Maldron hotel and the complete mixed-use scheme is a significant project and will support Newcastle’s continued economic development by attracting both business and leisure visitors to the heart of the city.

"We are looking forward to working with Standard Life Investments and Dalata, for whom we are delivering numerous hotel projects in the UK & Ireland.”

Will Fulton, fund manager at Standard Life Investments, said: “We look forward to working with McAleer & Rushe on the delivery of this new scheme in Newcastle.

"Dalata and its flagship Maldron brand are an exciting, well managed, high quality, competitive hotelier which we believe will compete well in the Newcastle market, a home to leading universities, a thriving business community and leisure scene.”

Joint agents CBRE & Steerforth Partners advised McAleer & Rushe, with Knight Frank advising Standard Life Investments.