Travelodge, a budget hotel brand in the UK, has reached a major agreement to acquire 66 Travelodge branded hotels from its largest landlord, LXi REIT plc, for a total consideration of £210 million (€244m), with the financial backing of GTAM shareholders.
The hotels acquired, spread across London and regional city centres (Birmingham, Bath, Leeds, Liverpool), as well as roadside sites, illustrate Travelodge's commitment to geographical diversification. This is designed to increase the value of the hotel portfolio while laying the foundations for future exploration of freehold acquisitions.
In the midst of a major brand transformation, Travelodge plans to accelerate its hotel refurbishment programme, aiming to modernise around 50% of its room stock by the end of 2024. This programme includes a new hotel design with a modern reception area, new generation guest rooms and improved café bars.
This transaction reinforces the strong relationship between Travelodge and LXi, with LXi remaining the largest lessor of the 69 Travelodge hotels it continues to own.
Following Travelodge's financial results for the third quarter of November 2023, with double-digit revenue growth of 16.7% to £782 million and adjusted EBITDA up 22.4% to £201.2 million, the company is set to complete the transaction on 28 February 2024.
To fund the acquisition, Travelodge will rely on additional investment from GTAM shareholders, proceeds from a third party funding facility secured against the assets acquired in the transaction, and approximately £35 million in cash. The newly created ownership group will be under the ownership of a newly formed parent company, Thame and London Limited, which will not guarantee the obligations or be subject to the covenants of Travelodge's existing senior secured notes maturing in 2028.
“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.” - Jo Boydell, Travelodge Chief Executive of Travelodge
“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 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.” - Simon Lee, CEO of LXI REIT Advisors
United Kingdom
