In November 2016 we acquired an interest in a newly created vehicle which owns three new, purpose built Travelodge hotels located in Weston-Super-Mare, King’s Lynn and Andover.
This was an “off market” opportunity where each of the hotels had been pre-let to Travelodge Hotels Limited on 25-year leases, each with five yearly upward only rent reviews linked either to the Consumer Prices Index (‘CPI’) or Retail Prices Index (‘RPI’) compounded annually. The developments had been largely completed under a combination of forward funding and forward commitments with one of the hotels already fully operational at the time our investment completed, with the other two expected to begin trading before the end of 2016.
The purchase price for the properties represented an average net initial yield of 5.96% once the assets are fully income producing which was a discount to the prevailing market values.
