Secure Income REIT has rejected a proposal from Travelodge suggesting a rental cut of 80%.
SIR said that it was “keen to strike a fair and reasonable balance between easing the cash flow burdens on our tenants brought about by the pandemic, and protecting the interests of our own shareholders”.
Travelodge said: “These are unprecedented times and some difficult decisions are going to have to be taken by landlords and tenants alike. What is clear is we all want to secure a stable business that can support rent payments for leases that will run for many decades ahead. We are confident that we can find a way through that is in everyone's interests.”
SIR described the proposal from Travelodge as “not in keeping with either the nature or the spirit of the proposals made by any of our other tenants who all engaged with us constructively and at an early stage.”
The Reit said that it had instead offered support which it believed to be "proportionate and consistent with the approach accepted by other tenants in our portfolio”. The group said that it was advanced stages of discussions (including supportive input from our lenders) to defer rental payments in order to assist with the timing of tenant operational cash flows.
SIR said: “Until the pandemic struck, Travelodge had substantial earnings and significant operating cash flows, and we consider that this business has considerable equity value as well as long-term viability. It also has very substantial shareholders in Goldman Sachs, Goldentree and Avenue Capital. We will therefore endeavour to work with Travelodge and its owners to find a reasonable solution to ease the current cash flow issues brought about by the lockdown.”