LXi completes £210m sale of 66 Travelodge hotels

LXi Real Estate Investment Trust (REIT) has completed the sale of 66 Travelodge-branded hotels to the Travelodge group for £210m.

LXi said the majority of the sale proceeds will be used to pay down debt, reducing loan-to-value (LTV) from 38% to 34% and reducing Travelodge’s proportion of group rent from 18% to 11%.

The REIT said the sale and debt repayment are not anticipated to have a material impact on the its earnings given the debt cost savings.

When the deal was announced in January, Simon Lee, CEO of LXI REIT Advisors, said: “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%, 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 operates 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.”

Jo Boydell, chief executive of Travelodge, added: “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.”

In January, LXi agreed terms with LondonMetric Property to an all-share merger to create the UK’s fourth-biggest REIT worth approximately £4.1bn.