A Travelodge hotel in Torquay has been bought by Riverside Capital on behalf of a group of private investor clients for £6.235 million.

The 90-bed freehold hotel is positioned in a prominent location near the centre of the town close to one of Torquay’s train stations and has recently been extensively refurbished. At around 31,312 square foot, it also contains a bar and café as well as 44 parking spaces.

The property is let to Travelodge Hotels on a long lease and benefits from uncapped rent review provisions, based on RPI, providing a degree of protection for investors against rising interest rates and investment yields.

It is a consistently strongly performing site for one of the UK’s leading hotel groups, with impressive occupancy rates of over 70% last year. Travelodge is the second largest hotel brand in the UK, with 504 hotels serving over 16.5 million guests in 2014.

The investors supplying the equity for the deal are members of private equity business, Connection Capital.

George Clark, Investment Director at Riverside Capital says: “This was a highly attractive proposition for Connection Capital clients keen to invest in secure, long dated, index-linked income. Recent strong performance in the budget hotel sector as a whole – and Travelodge specifically – looks set to continue as the market responds to positive fundamentals, such as increasing occupancy rates, RevPar and average room rates.”

Claire Madden, Director of Connection Capital says: “This is a popular hotel in the heart of a thriving tourist hot-spot, run by one of the leading hotel brands in the UK, so we are delighted to be able to offer this opportunity to our private investor clients. It presents a sensibly priced, income-generating deal with a strong improving covenant in a top destination on the “English Riviera”, which is seeing visitor numbers and room rates growing steadily. This is the kind of deal that private investors rarely get direct access to.”

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