Property Description

The Malmaison Newcastle is located at 104 Quayside, Newcastle upon Tyne, NE1 3DX. Classified as Upper Upscale, the property comprises a 9-storey hotel offering 122 rooms arranged across basement, ground and seven upper floors. Accommodation types include Standard, Standard twin and Standard double double rooms, Bridge view and Twin bridge rooms, Club deluxe and Club deluxe bridge view rooms, and Suites, Junior suites and Signature suites. The hotel is currently undergoing extensive renovations to enhance its bedroom offering, which will drive and enhance performance. Food and beverage facilities include the award-winning Malmaison Bar and Grill and Cafe Mal. Meeting and event space comprises four meeting rooms with a delegate capacity of 175. Other amenities include a fully equipped gym and spa facilities at basement level and 50 car park spaces (leased). The property has an EPC rating of B(28) valid until February 2035. The asset is held freehold, registered under title TY341126. The hotel is subject to a fully repairing and insuring lease to The Malmaison Hotel (Newcastle) Limited, guaranteed by MWB Malmaison Holdings Limited (renamed Malmaison Hotel Du Vin Holdings Limited), with an expiry date of 21 October 2046 providing an unexpired term of more than 21 years. Rent is reviewed five-yearly with annual compounding to RPI subject to a 2% collar and 4% cap.

Location

Malmaison Newcastle is ideally located with excellent connectivity and in close proximity to major leisure demand drivers and corporate occupiers. Nestled in the heart of Newcastle's vibrant Quayside, overlooking the iconic Tyne Bridge, the hotel provides easy access to the city's most renowned cultural landmarks, leisure destinations and corporate offices. Newcastle is well connected by a network of major roads including the A1 motorway. The city benefits from the Tyne and Wear Metro system, an efficient public transport system offering 60 stops across the Newcastle area including Newcastle International Airport. The Manors Metro station, the closest to Malmaison, is a convenient 12-minute walk or a brief 3-minute drive. Newcastle Central Station, one of the principal railway stations in the UK, is approximately a 15-minute walk or a 5-minute drive. Journey times by rail include York in 54 minutes, Leeds in 1 hour 20 minutes, Edinburgh in 1 hour 24 minutes, Manchester in 2 hours 13 minutes and London King's Cross in 2 hours 36 minutes. Newcastle International Airport is 15 minutes by car, handling over 5 million passengers in 2024 with 74 direct flight paths, the 11th busiest airport in the UK.

Market Context

Newcastle is experiencing significant regeneration and development activity across multiple major schemes. Newcastle Helix is a 24-acre science and technology hub focused on innovation and sustainability with over 1,000,000 sq ft. Forth Yards is a 15-acre regeneration of former industrial land near Newcastle Central Station with over 650,000 sq ft. The Stephenson Quarter is a mixed-use flagship development transforming six council-owned plots behind the station. Quayside West is a 15-acre waterfront development on a former industrial site. Pilgrim Street is a 450,000 sq ft major city centre regeneration project including the former Bank of England site, with Pilgrim Place 1 pre-let to the Department for Work and Pensions. Newcastle is home to the Metrocentre, the largest shopping centre in Europe occupying over 2 million sq ft, with a 7.2% increase in footfall recorded for 2024. Named the Best City in the UK for Food and Drink in 2024 by Which?. Within the top 10 regional office markets as of November 2024 according to BNP PRE, demonstrating the presence of corporate demand drivers. The city won two prestigious Green Flag Awards in 2024 for Jesmond Dene and Exhibition Park. Newcastle Arena has been chosen to host the MOBO Awards 2025 and the city is pursuing UNESCO City of Music status.

Headlease Structure

The property comprises two registered titles: 1. Freehold interest in the Hotel at 104 Quayside, Newcastle Upon Tyne NE1 3DX, registered under HMLR title number TY341126. 2. Leasehold interest in 50 car parking spaces at Sandgate, East Quayside, registered under HMLR title number TY341127. The Car Park lease is dated 24 March 1998 between (1) The Tyne and Wear Development Corporation (2) NQD Plc (3) East Quayside Management Limited and (4) The Malmaison Hotel (Newcastle) Limited, for a term of 999 years from 24 March 1998, expiring 23 March 2997. The headlessor for the Car Park is East Quayside Management Limited. Occupational lease structure: Both the Hotel and Car Park are subject to occupational leases dated 22 October 2011 between (1) Malmaison and Hotel du Vin Property Holdings Limited (2) The Malmaison Hotel (Newcastle) Limited and (3) MWB Malmaison Holdings Limited, each for 35 years expiring 21 October 2046. The tenant has underlet both the Hotel and Car Park to Malmaison Trading Limited by way of underleases dated 7 July 2014, each expiring 18 October 2046 (3 days before expiry of the headlease). Both underleases are contracted out of the Landlord and Tenant Act 1954. The Hotel lease is within the security of tenure provisions of the 1954 Act, meaning the tenant benefits from statutory renewal rights. The Car Park lease is contracted out of the 1954 Act. Both the Hotel and Car Park leases include a tenant option to renew for a further 35 years at open market rent. The tenant must give between 12 and 36 months' notice before the end of the contractual term. The Car Park renewal option can only be exercised if the Hotel option is also exercised. The seller (BMW (UK) Trustees Limited) holds shares in the estate management company (East Quayside Management Limited). The 1998 Transfer requires the Hotel owner not to make a relevant disposal (freehold transfer, grant of a lease for 50+ years, or assignment/termination of the leasehold) without simultaneously transferring the management company shares. Note: title to the Hotel is subject to a restriction protecting a Trust Deed dated 25 October 1983, requiring a compliance certificate for any disposition. The seller's solicitors have been asked to procure evidence of compliance and an application to remove the restriction on completion.

Restrictive Covenants

The land coloured yellow on the title plan (pre-12 April 1989) is subject to unknown restrictive covenants. No documents were produced to the Land Registry evidencing their nature. The report notes that without knowing the nature of these covenants, it is not possible to determine whether they have been breached or whether they prohibit or inhibit the current use of the property. The seller has been asked to confirm whether they are aware of the nature of any restrictive covenants and whether title indemnity insurance for unknown covenants is in place. If the seller cannot confirm the nature of the interests, the solicitors have recommended that title indemnity insurance be put in place prior to completion. The Car Park alienation provisions restrict dealings: the tenant may only assign or sublet the Car Park lease simultaneously and to the same party as the Hotel lease. If the Hotel lease terminates, the Car Park lease automatically terminates. The estate management company structure imposes a disposal restriction: the Hotel owner cannot transfer the freehold, grant a lease over 50 years, or assign/terminate the leasehold without transferring the management company shares simultaneously.

Easements & Rights

The 1998 Transfer grants a number of rights for the benefit of the Hotel over surrounding land that was part of the initial quayside development. However, the copy of the 1998 Transfer provided does not include plans, so it is not possible to confirm the location of these rights or whether the Hotel has sufficient access and other easement rights. The seller has been asked to provide a copy of the transfer including plans. The land coloured yellow on the title plan is also subject to unknown easements imposed prior to 12 April 1989, with no documents produced to the Land Registry. The nature and extent of these easements is unknown. An overhang issue has been identified: it is unclear whether the canopy over the Hotel entrance overhangs outside the title boundary. The adjacent land is owned by East Quayside Management Limited (in which the buyer will hold shares). If the canopy does overhang, rights from East Quayside Management Limited would technically be required, though the shared ownership structure mitigates the practical risk.

Charges & Encumbrances

Title to the Hotel is subject to a restriction protecting a Trust Deed dated 25 October 1983. A compliance certificate is required to register any disposition. The seller's solicitors have been asked to procure evidence of compliance and to provide a draft application to remove the restriction on completion. This restriction relates to the trust that holds the property and will need to be dealt with on the buyer's acquisition but will not affect future transactions once removed. The seller has the benefit of a floating charge over hotel fixtures, fittings and equipment, which is described as common practice where a hotel is leased with the required fixtures and fittings in place. The seller's solicitors have been asked to confirm that the floating charge will be assigned or novated to the buyer on completion. Mines and minerals are excepted from the freehold title (shown coloured pink on the title plan). Two risks are identified: (1) potential trespass during original construction from removal of minerals during foundation works, and (2) any future development works must avoid interfering with the minerals beneath the surface. The seller has been asked to confirm whether a title indemnity policy is in place; if not, one will be requested prior to completion.

Planning

The report states that the planning section is 'to follow once replies to enquiries are received.' No planning consents, conditions, or enforcement matters are reported in this version of the Red Flag Report. However, the report confirms the property is Grade II listed, noting that a Grade II listed building has particular historic and/or architectural significance and is subject to regulations protecting its unique character and preservation, with failure to comply being a criminal offence. The seller has been asked to confirm they are not in breach of any listed building obligations. Any future development or works to the property will need to comply with listed building consent requirements. The EPC rating is B, expiring 12 February 2035. The report notes that current minimum energy standard regulations will not affect the ability to let the property, but the Government intends to raise the minimum standard to Grade B.

Overage

No overage, clawback, or development uplift clauses are identified in this report.

Summary

This Legal Red Flag Report covers the acquisition by Alderan of Malmaison Newcastle from BMW (UK) Trustees Limited for a total consideration of GBP 19,400,000 (SDLT GBP 959,500). The property comprises a freehold hotel (HMLR TY341126) and a 999-year leasehold car park (HMLR TY341127), both let on 35-year occupational leases to 21 October 2046 and underlet to Malmaison Trading Limited. The principal legal risks and observations are: 1. Management company service charge risk (MEDIUM): The occupational lease references a superior lease (since surrendered) as the mechanism for recovering management company costs from the tenant. This creates a technical drafting deficiency whereby a vexatious tenant could refuse to pay management company contributions. Current practice is for the management company to invoice Malmaison directly and invoices are paid, so the practical risk is assessed as relatively small. The 2025 budget is GBP 78,227.11 (Hotel) and GBP 60,377.83 (Car Park). 2. Unknown restrictive covenants and easements (MEDIUM): Pre-1989 interests affect the title with no documentary evidence. Title indemnity insurance is recommended. 3. Mines and minerals exclusion (MEDIUM): Mines and minerals are excepted from the freehold title, creating trespass risk from original construction and constraints on future development. Title indemnity insurance requested. 4. Car Park forfeiture provisions (LOW): The Car Park headlease contains an all-encompassing forfeiture clause without a mortgagee protection clause, though there is a notice and cure requirement. A lender-only insurance policy can typically be obtained. 5. Car Park termination right (LOW): The Car Park headlessor may terminate on 3 months' notice if it wishes to demolish and reconstruct, but must offer equivalent alternative spaces. This operates as a 'lift and shift' mechanism. 6. Car Park insurance gap (LOW): The Car Park lease requires the management company to insure but does not oblige reinstatement from insurance proceeds. Mitigated by the shared ownership structure of East Quayside Management Limited. 7. Grade II listing: Standard compliance obligations apply; seller asked to confirm no current breaches. 8. Trust Deed restriction on Hotel title (to be resolved on completion) and floating charge over hotel FF&E (to be assigned/novated on completion) are transactional items expected to be resolved. 9. Tenant option to renew for a further 35 years at open market rent is a significant long-term tenure consideration. 10. Planning and construction sections are deferred pending replies to enquiries and are not addressed in this version of the report.

ROT Key Facts