£48m Gatwick hotel sale takes off

8 Aug 2022 | by Chris Borland

The 400-room asset has a long lease in place with Travelodge

·   What Travelodge at Gatwick Airport marketed for sale

·   Why Rent reviews linked to RPI and uncapped

·   What next Kimmre leading sale

A hotel let to Travelodge at Gatwick Airport has been floated for a £48m sale, React News can reveal.

A private investor has instructed Kimmre to sell the asset, with the guide price equating to a net initial yield of 6%.

The hotel was let to Travelodge Hotels on a 35-year FRI lease until June 2046, although this was subsequently extended by 36 months – due to Travelodge’s CVA – until June 2049. The hotel is let at a passing rent of £3.06m a year.

The lease is subject to five-yearly reviews uncapped to RPI with the next review occurring in July 2026, which would provide a reversionary yield of 7.48% based off current forecasts.

It has 400 bedrooms arranged over ground and six upper floors. The hotel underwent a comprehensive refurbishment completed in 2021 to upgrade rooms, common areas and cafe.

The property occupies a prominent spot at the north boundary of Gatwick Airport, a short drive from junction 9 of the M23, which connects it to central London.

Marketing literature associated with the sale says the site’s vacant possession value is in excess of investment value.

“The subject property would benefit from strong hotel operator demand due to its location adjacent to the Gatwick Airport and the excellent rail connectivity to more than 120 stations across the UK. Having reviewed the vacant possession value, we are of the opinion it is in excess of investment value assuming a repositioning cost of £4m,” according to the marketing brochure.

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