Update on Travelodge and Rent Collection
4 June 2020
LXi REIT plc
(the "Company" or the "Group")
UPDATE ON TRAVELODGE AND RENT COLLECTION
The Board of LXi REIT plc (ticker: LXI) notes that Travelodge Hotels Limited ("Travelodge") has filed proposals for a company voluntary arrangement ("CVA"), and provides the following information.
The Group owns 12 hotels let or pre-let to Travelodge, representing 10% of the annual contracted rents, including contracted rents under agreements for lease. Two of these hotels are under construction and benefit from cash-backed developer licence fees and a further two hotels are currently in developer funded rent free periods, reducing the current quarter's exposure to Travelodge to 8%.
Travelodge's proposed CVA, in combination with support from Travelodge's shareholders, is designed to provide cashflow assistance to Travelodge as a result of the impact of Covid-19.
The Board of Directors will scrutinise the proposals, along with our advisors, in order to best protect the Company's position in determining whether or not to support the CVA proposals. We will carefully consider all of the Company's options including the right to forfeit Travelodge's leases - a right which it retains. It is anticipated that the creditor vote will take place on 19 June 2020.
The impact on the Company's total annual contracted rent roll as a result of this Travelodge proposal (assuming the Company does not forfeit Travelodge's leases) would be:
· a reduction of 4.6% of the Group's annual contracted rent during the financial year ending March 2021;
· a reduction of 2.9% of the Group's annual contracted rent during the financial year ending March 2022; and
· a return to the full annual contracted rent due under the leases in the financial year ending March 2023.
Travelodge also proposes to provide landlords with a share of future revenues should certain hurdle rates be met, along with increasing the length of the leases.
Dividend guidance and update on March rent collection
The Travelodge CVA has no impact on the quarterly dividend guidance provided on 18 May 2020 of 1.30 pence per share. The Company's Investment Advisor has continued to progress discussions with tenants regarding payment of the March 2020 quarter date's rent and has now agreed repayment terms with virtually all tenants.
FOR FURTHER INFORMATION, PLEASE CONTACT:
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LXI REIT Advisors Limited John White (Partner, Fund Manager) Simon Lee (Partner, Fund Manager) |
Via Maitland/AMO |
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Peel Hunt LLP Luke Simpson |
Tel: 020 7418 8900 |
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Maitland/AMO (Communications Adviser) James Benjamin |
Tel: 020 7379 5151 |
The Company's LEI is: 2138008YZGXOKAXQVI45
NOTES:
LXI REIT plc invests in UK commercial property assets let, or pre-let, on very long (typically 20 to 30 years to expiry or first break), inflation-linked leases to a wide range of strong tenant covenants across a diverse range of robust property sectors.
The Company may invest in fixed-price forward funded developments, provided they are pre-let to an acceptable tenant and full planning permission is in place. The Company will not undertake any direct development activity nor assume direct development risk.
The Company is targeting a quarterly dividend of 1.30 pence per ordinary share for the quarter that commenced 1 April 2020. It will continue to monitor the improving visibility on its future rent collection as the UK moves out of lockdown and is keeping its dividend guidance under careful review on a quarterly basis.
The Company, a real estate investment trust ( " REIT " ) incorporated in England and Wales, is listed on the premium listing segment of the Official List of the UK Listing Authority and was admitted to trading on the main market for listed securities of the London Stock Exchange in February 2017.
The Company is a constituent of the FTSE EPRA/NAREIT and MSCI indices.
Further information on the Company is available at www.lxireit.com
* These are guidance levels or targets only and not a profit forecast and there can be no assurance that they will be met.
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