A joint venture of US groups Goldman Sachs, Goldentree Asset Management and Avenue Capital is buying 144 UK hotel properties operated by Travelodge, the budget hotel chain that they acquired two years ago.
A joint venture of US groups Goldman Sachs, Goldentree Asset Management and Avenue Capital is buying 144 UK hotel properties operated by Travelodge, the budget hotel chain that they acquired two years ago.
Goldman Sachs, Goldentree and Avenue Capital are each taking a one-third stake in the hotel portfolio, which is being acquired for £520 mln (€650 mln) in cash.
The three partners already own the Travelodge operating business which they bought from Dubai International Capital in August 2012. At the time the consortium bailed the company out through a debt-for-equity swap which included writing off bank debt of £235 mln and a £75 mln capital injection.
Now the investors are taking control of the Travelodge-operated assets, which comprise a total of 8,256 rooms and generate an annual £35.5 mln in rents. The properties - including 11 properties in Greater London and 23 along motorways - have a weighted average unexpired lease term (WAULT) of 29.4 years.
The vendors of the 144 hotels are Lloyds Banking Group, which is both an equity investor and lender to the assets, as well as Prestbury Investment Holdings, Tom Hunter’s West Coast Capital and the Reuben Brothers’ Aldersgate Investments.
The Travelodge hotels formed part of the Grove portfolio which was marketed by CBRE earlier this year. In addition to the hotel assets, the Grove package included a subpool of 47 Spirit and 16 Orchid pubs which was sold separately in August to Cerberus Capital Management for £185 mln, reflecting a 7% net initial yield.
According to those who track the market, the hotels sold to Goldman Sachs and its partners received a total of 10 bids, largely from US capital. Second-round bids came in at over £500 mln.
Completion of the deal is expected by mid-September.
'In the past 18 months we have invested £57 mln in modernising our hotels, helping us attract more business customers and deliver strong growth,' commented Peter Gowers, CEO of Travelodge. 'We are outperforming the market and the strength of the business is reflected in the strong interest we see from real estate institutions in developing and owning Travelodge hotels.'
