Travelodge has bought 66 hotel freeholds and long leaseholds from its largest landlord, LXi REIT, for £210m.
The hotels have been acquired through a newly created property holding group, under a new Travelodge group holding company, which is supported by its owner, GoldenTree Asset Management.
The portfolio includes hotels in London, regional city centres including Birmingham, Bath, Leeds and Liverpool, and roadside locations
Proceeds from the sale, which was in line with the latest book value, will be used by LXi REIT to pay down debt, reducing group LTV to 34% from 38%.
It will also reduce Travelodge’s proportion of LXi’s rent from 18% to 11%.
The sale is expected to complete on 28 February.
Travelodge chief executive Jo Boydell said: “The acquisition of 66 Travelodge hotels from LXi REIT, with support from our owner GoldenTree Asset Management, will mark a positive step for Travelodge as we seek to optimise our hotel portfolio and diversify our freehold/leasehold split to enhance value. The new structure will provide us with a platform to explore further freehold acquisitions. We have nearly four decades of expertise in operating budget hotels and we look forward to continuing to invest in our hotel network to drive growth.”
Travelodge said it continues to see significant growth opportunities in the UK, with more than 300 target locations identified following a review of gaps in the market.
The transaction is expected to be funded through a combination of a further shareholder investment from GTAM, the proceeds of a third-party financing facility secured on the assets acquired in the transaction, and approximately £35m of cash from Travelodge.
The newly created property holding group that will acquire the assets will be held by a newly formed parent company of Thame and London and will not guarantee or be subject to the covenants under the existing Travelodge senior secured notes due in 2028.
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