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LONDON -Topland Group has splashed £17 million ($25 million) into a hotel development at a motorway service area north of London.

Despite warnings yesterday from brokerage Jones Lang LaSalle Hotels that London’s hotel market is likely to feel the worst knock-on effects of the terrorist attacks on the USA, Topland believes the hotel has excellent prospects for rental and capital growth. The Government’s Highways Agency has predicted that motorway traffic will continue to grow at 3% per annum, and London Mayor ken Livingstone has pledged to reduce congestion in the capital by levying tolls on all vehicles entering the central area.

Topland is providing the development funding for a new 202-bedroom hotel at The London Gateway Motorway Service Area on the M1. It has been prelet to service station and hotel operator Welcome Break for a term of 35 years. The purchase price reflects a net yield of 6.8%.

Work is due to commence on site in this month with completion in April 2002. The hotel immediately adjoins the service area at London Gateway and replaces an existing smaller hotel on the site.

Topland chairman and chief executive Sol Zakay defended his decision to pour cash into the ailing industry. ‘This property is situated in a unique location and we expect both the rental and capital value to grow substantially,’ he said. ‘It illustrates our commitment to funding developments let to excellent covenants in good property locations.’

Colliers Conrad Ritblat Erdman advised the vendor.

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