Travelodge ‘confident' of resolution despite landlord rejecting rent payment proposal
Travelodge's landlord has rejected a rent payment proposal from the hotel chain, saying it was "not in keeping with either the nature or the spirit of the proposals" made by any of its other tenants.
On Monday it was reported that the landlord, Secure Income REIT, which owns 123 Travelodge hotels generating an annual rental income of £28.3m, had initiated legal action against Travelodge to recover outstanding rent.
The hotel chain has proposed rent cuts of up to 80% from landlords until the end of 2021 to help it survive the shutdown brought about by the coronavirus crisis. A spokesperson from Travelodge said that given the company had been leading the budget hotel segment in growth for the last five years, resolving the rent dispute was "in everyone's interests".
"These are unprecedented times and some difficult decisions are going to have to be taken by landlords and tenants alike. What is clear is we all want to secure a stable business that can support rent payments for leases that will run for many decades ahead. We are confident that we can find a way through that is in everyone's interests."
The statement went on to say that shareholders were already "picking up the bill for nearly £200m" through the use of reserves and new facilities: "Our proposals do ask landlords to make a contribution but they are due to receive over £3.5bn in rent over the life of the leases - so this makes sense."
A statement issued on Wednesday by Secure Income REIT, confirmed that "the only rents now outstanding are those due from Travelodge", which account for 6.4% of the company's annual rental income.
It continued: "Following our announcement of 20 April, the company finally received a proposal from Travelodge, which was not in keeping with either the nature or the spirit of the proposals made by any of our other tenants who all engaged with us constructively and at an early stage. We have not been able to accept the proposal from Travelodge but have offered support which we believe to be proportionate and consistent with the approach accepted by other tenants in our portfolio."
The statement said that Travelodge had "substantial earnings and significant operating cash flows" as well as "very substantial shareholders" in Goldman Sachs, Goldentree and Avenue Capital.
Secure Income REIT confirmed it would endeavour to work with Travelodge and its owners to find a "reasonable solution" to ease the current cash flow issues brought about by the lockdown.
