LXI REIT has announced that it has exchanged contracts to acquire the Travelodge hotel at Haverhill in Essex, and has now completed on the pre-let forward funded purchase of the Travelodge, Starbucks and Greggs bakery development at Melksham, near Bath, the exchange of which was announced on 10 March 2017. LXI REIT says that both acquisitions are being funded from equity resources, with senior debt finance expected to be introduced in the near term.
The purchase price for the Travelodge hotel property at Haverhill is £5.5 million (excluding purchaser’s costs), which reflects a net initial yield of 5.92% on the asset acquisition. The hotel is fully let to Travelodge Hotels Limited, the principal trading company of the Travelodge group, the UK’s largest independent hotel brand. The lease has an unexpired term of over 24 years (expiring in July 2041), without a break, and is subject to five yearly upward only rent reviews index-linked to the Retail Price Index (collared and capped at 1% p.a. and 4% p.a. compound). The property was purpose-built in 2007 and comprises an 80 bedroom hotel, arranged over three floors, with a large 100 cover restaurant and meeting rooms, along with an 82 space car park. It is located on Phoenix Road in Haverhill, a market town on the borders of Essex and Suffolk, which LXI REIT says is a well-positioned, fast-growing commuter town and business overspill area for Cambridge.
John White, Partner of LXi REIT Advisors Limited, says that, “The Haverhill Property benefits from being the only branded budget hotel within a 12 miles radius, in a good South East location and has an unexpired lease term certain of over 24 years. The net entry yield of 5.92% provides an attractive and growing income stream for the Company with rental uplifts index-linked to RPI”.
This Haverhill property is the company’s fourth acquisition coming to market on 27 February 2017. The Company says that it has now committed £42 million of its IPO proceeds at a blended net initial yield of 5.5% and that all of these acquisitions have been on an off-market basis and benefit from a long weighted average unexpired lease term to first break of 24.5 years, across a range of sectors and strong tenants, which include GE Oil & Gas, Q-Park, Starbucks and Travelodge. The company says that it is in advanced discussions on a number of additional forward funding and built assets which would further diversify our portfolio.
LXI REIT acquires Haverhill Travelodge in Essex : LXI