The Board of Secure Income Reit Plc (the “Company”), the specialist long term income REIT, is pleased to announce that, following its announcement of 8 September 2016, it has completed the €217.9m (£196m) acquisition of a portfolio of 55 Travelodge Hotels.
The portfolio comprises 55 hotels with a weighted average unexpired lease term of 27 years with upwards only RPI linked rent reviews throughout the term, let to Travelodge Hotels Limited, the UK’s second largest budget hotel brand.
The €217.9m (£196m) total cost of the portfolio includes purchase costs and reflects a yield of 7%. The consideration for the purchase has been financed by the proceeds of the placing of 46.9 million new ordinary shares in the Company at 298.6 pence per share, which raised gross proceeds of €155.6m (£140m), as announced on 4 October 2016, and a new €66.7m (£60m) seven year non-recourse secured debt facility arranged by M&G.
In addition to increasing the size and diversification of the portfolio, the acquisition provides a number of benefits to the Company and its shareholders including an anticipated 14% increase in the Company’s dividend yield from a current level of 3.9%, based on 30 June 2016 EPRA NAV, to 4.5% on the Placing Price. In addition, the Company’s long term contracted rental income, with fixed and RPI linked rent reviews should continue to result in increased net rent every year and hence provides attractive dividend growth prospects which the directors estimate should equate to 6.5% per annum over the next six years. Furthermore, the Company’s Net LTV ratio will reduce from 59.5% to 56.0%.
