£9.4m sale

Edinburgh Travelodge hotel acquired by UBS Asset Management

Booked in: new owner for Travelodge hotel

A Travelodge Hotel in Edinburgh’s west end has been acquired by UBS Asset Management’s Real Estate & Private Markets business for £9.4 million.

The property was bought from a private individual on behalf of the UBS Long Income UK Property Fund and will continue to be operated by Travelodge Hotels on a long-term lease running to 2042, with a landlord option for a further five years. The deal reflects a net initial yield of circa 5.25%.

The 73-bed hotel over five-storeys was refurbished in 2013 and occupies a site close to a proposed developement of 340,000 sq ft of office space, 54,000 sq ft of retail and leisure units, and a car park near Haymarket station.

Jonathan Hollick, head of transactions for REPM’s Real Estate UK team, said: “Travelodge is one of the largest brands within the UK budget hotel sector, and we look forward to a strong partnership with them as the hotel’s continued operator and occupier.

“The stable long-term, indexed cashflow offers attractive income distribution for the Fund’s investors while also providing diversification benefits to the rest of their fixed income and property portfolios.

“Moreover, the performance of Edinburgh’s hotel market is second only to London in terms of occupancy and RevPAR [revenue per available room] growth, and with the Haymarket regeneration scheme set to add further value to a city already receiving above-average levels of hotel occupancy, we expect this acquisition to provide strong returns for our investors.”

UBS-LIF Property targets a net income return of 5% p.a. and offers investors the opportunity to access a portfolio of long-lease assets benefitting from indexed rental increases, with a focus on alternative sectors.

JLL acted for UBS-AM and both Cushman & Wakefield and Greenberry Advisors acted for the vendor.

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