The Travelodge hotel at Woolwich, which opened in July 2012, has been sold on a freehold basis, with the purchaser having an option to acquire the long leasehold ground floor retail units once the vacant retail is fully let.
The Travelodge is let on a 25 year lease term, with 5 yearly rent reviews in line with RPI.
Colliers’ National Investment team acted with joint agents Cradick Retail to represent Powis St Estates. The purchaser was unrepresented.
Tony O’Brien, UK Development Director for Travelodge said, “Very few investment sales have happened since Travelodge’s financial restructure and change in ownership last autumn, so it has been difficult to assess where yields currently sit for the Travelodge covenant. This is a good indication and several other investment sales are in solicitors’ hands which should provide a better picture shortly.
“What is clear, however, is that the market is still absorbing the positive impact of our restructure, which has significantly improved Travelodge’s covenant, and whilst this happens our investments are trading at a significant yield discount to our competitors. This yield gap is really starting to attract new investors, both institutional and private.
Travelodge is currently undertaking a £57 million refurbishment programme that is refitting its estate with a brand new room design, including new beds.
The programme began in March 2013 and already over 5,000 of its 30,000 bedrooms have been completed to the new brand standard. By the end of 2013, over half of Travelodge’s estate will have been upgraded, with 85% being completed by the end of summer 2014.
Tony O’Brien continued:
“The feedback from our customers for our new room design has been unanimously positive. They know that we already have the best hotel locations and the cheapest prices and this major capital investment in our hotels and the great product that it will provide will make Travelodge the best value hotel chain in the UK.”