Travelodge looking to raise GBP 20m for GBP 100m distressed hotel fund

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Travelodge, a privately owned UK hotel company, is looking to target institutional investors to raise GBP 20m for its planned GBP 100m acquisition fund, Managing Director Paul Harvey told mergermarket on the sidelines of the World Budget & Economy Hotels Congress.

Travelodge today announced a 50:50 joint venture with Meghraj, a real estate group and property fund manager, with which it will be targeting distressed hotel assets in the UK. The fund will comprise GBP 60m debt and GBP 40m equity, of which GBP 20m of the latter will be coming from Meghraj’s high-net-worth clients, Harvey explained.

“I don’t think the most likely [institutional] investors would be private equity, more pension funds (…)”, Harvey said when asked for a profile of the most likely backer for the venture.

Speaking at the conference today, Harvey said the vehicle aims to be live by September, with funds deployed over the following six to nine months from that date.

“There is a feeling the prices [of hotels] will be dropping from September onwards,” Harvey said.

With GBP 100m in funds, the company is hoping to acquire between eight and fourteen hotels in the UK, Harvey said. Travelodge currently operates 380 hotels in total, with eight in Ireland, three in Spain and the rest in the UK. Harvey said the UK will be a primary focus for Travelodge over the coming months.

Travelodge is backed by Dubai International Capital.

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