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August 2017

Travelodge Hotel, Tipton Road, Dudley, DY1 4TA

Brand Approved

Aviva Investors, represented by FSP, has recently completed the acquisition of a new Travelodge Hotel on the edge of Dudley town centre.

The property comprises a 78 bed hotel with 48 cover restaurant and 72 car parking spaces.

The property is let to The Borough Council of Dudley for a term of 25 years from August 2017.  The lease is held on full repairing and insuring terms with 5 yearly reviews to compounded RPI collared at 1% and capped at 4% pa compounded.  The commencing rent is £279,706 per annum.  The tenant has the option to renew the lease for a term of 25 years subject to tenant options to break the lease in the 10th and 20th years, subject to 6 months notice.

The tenant has simultaneously sublet the property to Travelodge Hotels Ltd on the same terms at a rent of £329,706 per annum (£4,227per room).  This will deliver the Council a profit rent of £50,000 per annum.

The development funding sold for £5,829,430 which reflected a net initial yield of 4.50%.  The property was acquired from Hinton Group, who acted as developer.

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