United Kingdom economy hotel firm Travelodge has completed the acquisition of 66 hotels from London-based real estate investment trust LXi REIT, which remains Travelodge's largest landlord.
The deal's closing price tag is £210 million ($266 million), according to a news release. The hotel portfolio now reverts to Travelodge PropCo Group in a combination of freehold and long-leasehold agreements.
Travelodge PropCo Group is a separately held division to Travelodge’s operating division, Travelodge OpCo Group, and both are held by Travelodge’s newly formed parent, T&L Holdco Limited.
Formed in 1985, Travelodge has approximately 600 hotels, with a majority located in the U.K. Travelodge also has a scattering of hotels in Spain and Ireland. It is the second-largest U.K. hotel firm by hotel count to Premier Inn, which is owned by Whitbread PLC and also includes the brand Hub by Premier Inn.
The Travelodge-LXi REIT deal was first touted in November 2023 and agreed to in January of this year.
Upon announcing the deal, LXi REIT CEO Simon Lee said the acquisition price was in “line with the latest book value. Most of the sale proceeds will be used to pay down debt, reducing group loan-to-value to 34%, and Travelodge’s proportion of group rent will reduce to 11%.”
The transaction comes several years after Travelodge and its private-equity owners were in dispute with the brand's hotel landlords.
LXi REIT and other landlords raised concerns about a new business model Travelodge imposed during the COVID-19 pandemic.
Travelodge said at the time that a financial overhaul was needed to weather the pandemic and asked its landlords for rent reductions via a process called a company voluntary arrangement, or CVA.
Permitted to do so, some landlords exited the Travelodge system. In 2020, management firm Ago Hotels secured nine former Travelodge properties with plans to rebrand them as Ibis Budget hotels.
Travelodge is owned by New York City-based GoldenTree Asset Management, but at the time it was owned by a consortium of private equity owners including Goldentree, Avenue Capital and Goldman Sachs.