As a result of falling property valuations, LXi Reit have put up a vast amount of the well-known hotels up for sale with a price tag of more than £200m.
This week, LXi Reit, a real estate organisation best known for owning the land Alton Towers is situated, have confirmed they have found a buyer for 66 of its Travelodge’s, which have been set at £210m.
As it stands LXi Reit said: ‘The sale remains subject to contract and due diligence and there is therefore no certainty that the sale will be complete. A further announcement will be issued following exchange of contracts.’
Should the sale be successful, bosses from LXi Reit have stated that they plan to use the money to pay their own debts, which would ultimately reduce their loan-to-value, the ratio of what you borrow as a mortgage against how much you may as a deposit, to 34% from 38%.
Against this backdrop, as the costs of debts continue to rise and property valuations are falling, other property owners have also signalled they want to cut their loan-to-values.
To go into a bit more detail, LXi Reit currently own £3.2bn which has come from shops, warehouses, offices, and hotels across the UK. It’s annual rent roll is £204m, of which 18% comes from Travelodge. However, this proportion would reduce to 11% if the sale of the 66 hotels is confirmed.
Initially, the real estate group had wanted to sell 30 Travelodge’s but, in response to investor demand, decided to throw in more, according to React News, the property trade magazine that first reported the offload.
The decision has opened up opportunities for LXi manger Simon Lee and his team at LXi Reit Advisors, which includes former AEW UK Reit manager Alex Short as chief investment officer. They are turning their attention to a pipeline of assets from open-ended funds forced to sell their large long-income portfolios as investors exit the sector.
Image: Claudio Schwarz
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