Travelodge has exchanged contracts to acquire 66 Travelodge-branded hotels on a freehold and long leasehold basis from LXi REIT for £210m.
The portfolio comprises hotels in London, regional city centres – including Birmingham, Bath, Leeds and Liverpool – and roadside locations.
Jo Boydell, chief executive of Travelodge, 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.
“We are pleased to announce this transaction with LXi, with whom we have enjoyed a strong working relationship over many years. We look forward to continuing to work with LXi, who remain our largest landlord, with the 69 Travelodge hotels they continue to own.”
Simon Lee, CEO of LXi REIT Advisors, added: “We are delighted to be transacting with Travelodge on this landmark sale of 66 hotels for £210m, which is in line with the latest book value. Most of the sale proceeds will be used to pay down debt, reducing group LTV to 34%, and Travelodge’s proportion of group rent will reduce to 11%.
“The sale and debt repayment are not expected to have a material impact on the company’s earnings. Travelodge operate a best-in-class hotels business and the firm commitment of its owners to the business is demonstrated by their support to enable the purchase of 66 of its assets.”
The transaction is expected to complete on 28 February 2024 and it will be funded through a combination of a further shareholder investment from GoldenTree Asset Management, the proceeds of a third-party financing facility secured on the assets acquired in the transaction and approximately £35m of cash from Travelodge.
