Legal & General Property (LGP) has acquired 19/31 Piccadilly Gardens in Manchester, which includes units let to Zizzi’s and Nando’s,  for £23.1m from Jolan Piccadilly Limited.

This equates to a net initial yield of 4.84%.

Occupying a prominent position overlooking Piccadilly Gardens, at its junction with Oldham Street, the 87,376sq ft property was comprehensively redeveloped earlier this year.

It comprises the two restaurant units and a Morrison’s food-store arranged over ground and basement floors, together with a 157-bed Travelodge hotel on the five upper floors.

With an average unexpired lease term of approximately 21.5 years to expiry and approximately 19.5 years to breaks, the property is held freehold.  It is let to WMMorrison Convenience Stores Ltd until 12 January 2029, Nandos Chickenland Ltd and Gondola Restaurants Ltd (Zizzi) until 12 January 2034 and Travelodge Hotels Ltd until 12 January 2039.  The total current passing rent is £1,183,650 per annum, 78% of which is subject to RPI linked rent reviews.

The asset was purchased on behalf of the Legal & General UK Property Fund. 

Matt Jarvis, fund manager of the Legal & General UK Property Fund, said: “Piccadilly Gardens is a key location within Manchester’s Central Business District and forms a natural continuation of the prime retailing area along Market Street.  As such, it has continued to establish itself as a new vibrant leisure pitch within the city centre with a number of leading restaurant operators keen to establish a presence in the area.

“Displaying strong fundamentals, an excellent income profile and a couple of asset management opportunities, our purchase of 19-31 Piccadilly Gardens is considered to be a medium-long term hold for the Fund.  Complementing the Fund’s other holdings in the area, which include Royal Buildings, opposite, and Manchester’s Malmaison hotel, a few doors down, we believe that  demand for good quality modern units in prime locations will always be present and that these assets will continue to benefit from wider regeneration of Manchester’s City centre.”