LXi exchanges contracts on Haverhill Travelodge

LXi REIT announced on Wednesday that it exchanged contracts to acquire the Travelodge hotel at Haverhill, Essex.

The London-listed real estate investment trust also confirmed it had 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.

Both acquisitions were being funded from equity resources, with senior debt finance expected to be introduced in the near term.

The purchase price for the Haverhill Property was £5.5m, excluding purchaser's costs, reflecting a net initial yield of 5.92% on the asset acquisition.

LXi said the hotel was fully let to Travelodge Hotels - the principal trading company of the Travelodge group and the UK's largest independent hotel brand.

The Travelodge lease had an unexpired term of over 24 years, expiring in July 2041 without a break, and was subject to five-yearly upward-only rent reviews index-linked to the Retail Price Index - collared and capped at 1% pa and 4% pa compound.

Purpose-built in 2007, the Haverhill Property comprised an 80 bedroom hotel, arranged over three floors, with a large 100-cover restaurant and meeting rooms, along with an 82-space car park.

“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,” said John White, partner at LXi REIT Advisors.

“The net entry yield of 5.92% provides an attractive and growing income stream for the Company with rental uplifts index-linked to RPI.”

White said it was the fourth acquisition since the company's admission on 27 February.

“The company has now committed £42m of its IPO proceeds at a blended net initial yield of 5.5%.

“All 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.

“We are also in advanced discussions on a number of additional forward funding and built assets which meet the company's investment criteria and which would further diversify our portfolio.”