Travelodge has exchanged contracts to acquire 66 Travelodge-branded hotels from its largest landlord, LXi REIT for a total of £210 million.
The budget hotel company said the purchase will be funded through a combination of a further shareholder investment from owner GoldenTree Asset Management, the proceeds of a third party financing facility secured on the assets acquired in the transaction, and around £35 million of cash from Travelodge.
Travelodge expects to complete the acquisition of the hotels - located across London and in regional city centres such as Birmingham, Bath, Leeds, Liverpool – on February 28. LXi will continue to remain Travelodge’s largest landlord, with 69 hotels.
Why it matters
Travelodge has continued to expand its own reach over the past few months, with the company increasing its presence in Spain – and identifying 20 further locations in the country – and also seeking to open 300 additional hotels in the UK. It has also commenced a renovation programme, with plans to upgrade around 50 per cent of its room estate by the end of 2024. It seems Travelodge is gearing up to take advantage of the growing popularity of the budget hotel segment.
What they said
Jo Boydell, Travelodge Chief Executive 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.”
Simon Lee, chief executive officer of LXI REIT Advisors added: “We are delighted to be transacting with Travelodge on this landmark sale of 66 hotels for £210 million, 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 per cent, and Travelodge’s proportion of group rent will reduce to 11 per cent. The sale and debt repayment are not expected to have a material impact on the company’s earnings.”