The latest London development is an existing building ready for conversion near Leicester Square and Trafalgar Square.
Subject to planning, Z Hotels’ latest offering is expected to have a minimum of 81 rooms and a maximum of 95 rooms.
The acquisition is a mixed-use property, consisting of a ground and basement floor with restaurant/retail use and four storeys of office use accommodation above ground floor, plus a fifth-floor attic.
Entrepreneurial bank and real estate funding specialist OakNorth and ASK Partners provided a £23m co-loan to acquire and refurbish the five-storey vacant office building.
The latest facility marks the inaugural co-loan from the two companies.
Compact but well-designed
Commenting on the deal, Bev King, CEO at Z Hotels, said: “Our guests predominantly want to spend a couple of nights in a city centre location either for business or pleasure, to explore the city, and to sleep in generously designed surroundings.
“This new site situated on Leicester Square’s doorstep embodies this demand perfectly, providing our residents with compact but well-designed bedrooms at affordable prices. Our relationship with OakNorth and ASK now spans multiple transactions and we see them both as key funding partners who we know we can rely on to support our ambitious growth targets.”
Deepesh Thakrar, senior director, debt finance at OakNorth, commented: “Z Hotels is now one of our longest standing customers and we’re delighted every time we have the opportunity to support its best-in-class team.
“The group is an incredibly experienced hotel operator that continues to focus on delivering high-quality rooms and a premium visitor experience, that’s demonstrated through its average occupancy rate of 96% across all its hotels. Given London’s hotel market is set to show strong resilience against the current downturn, we fully expect this new hotel to be another success story for Z Hotels.”
Daniel Austin, CEO and co-founder of ASK, added: “It is always a pleasure to work with our partner OakNorth and Z Hotels. This is an exceptionally well-located site which fits Z Hotels’ target market perfectly, capitalising on the growth we’re seeing in single business travellers during the week and short stay tourists at weekends.
“Given Z Hotels’ track record as a successful owner operator of five other hotels within close proximity of this site all with high year-round occupancy levels, ASK was fully supportive of the project and happy to provide a 36-month loan to acquire this building, which I anticipate will be another well-designed and popular hotel for the group.”
Z Hotels launched its ‘compact luxury’ accommodation model in London with the opening of Z Soho in 2011. Since then, the hotel chain has experienced continued success with 14 sites now operational, including 11 in London and one each in Liverpool, Bath, and Glasgow, offering over 1,700 rooms.
The group has been a long-standing customer of both OakNorth and ASK, most recently securing a loan with OakNorth in June this year to refinance an existing loan, as well as fund the construction of an additional 20 rooms at its Piccadilly location. ASK also provided funding for the group’s Trafalgar Square hotel.