LONG SECURE HOTEL INVESTMENT IN GLASGOW /1 ......AEADRA KILMACOLM CYDEBA AE BEARDE PAEY EA BRDE...

L O N G S E C U R E H O T E L I N V E S T M E N T I N G L A S G O W / 1

Travelodge G L A S G O W ‘ B R A E H E A D ’

1 5 0 K I N G S I N C H R O A D , B R A E H E A D , G L A S G O W, PA 4 8 Z L

S E CU R E LO N G T E R M I N V E ST M E N T I N G L A S G O W


1 5 0 K I N G S I N C H R OA D , B RA E H E A D , G L A S G O W, PA 4 8 Z L



SECURE LONG TERM INVESTMENT IN GL ASGOW / 0 2

INVESTMENT SUMMARY

�Glasgow is the largest city in Scotland and one of the UK’s major retailing and conference/ events destinations.

�Glasgow has a broad, sustainable demand base for hotels, with a healthy mix of business and leisure demand.

�99-bedroom hotel built for Travelodge in August 2008, with a large reception, café and 101 secure parking spaces.

�Let to Travelodge Hotels Ltd (D&B 5A1) for a remaining term of 21.2 years (inclusive of landlord’s option to extend).

�Upward only rent reviews every 5 years linked to uncapped RPI, the next in August 2018.

�Current passing rent of £395,889 per annum, which is forecast to rise to £449,494 per annum in August this year*.

�The current passing rent reflects a room rate of £3,999 and forecast to rise to £4,540 in August 2018.

�Heritable interest (Scottish Equivalent of English Freehold).

We are seeking offers in excess of £7,000,000 (Seven Million Pounds Sterling), exclusive of VAT, for our client’s heritable interest in the property. This reflects a net initial yield of 5.33%, rising to 6.05% in August 2018, allowing for purchaser’s costs of 6.16%.

* Forecast rent rise based on RPI index to date, with RPI currently running at 4.1% pa.



Intu Braehead Shopping Centre

Soar at intu Braehead

Glasgow Airport

R iver Clyde

Travelodge

KING INCH’S ROAD

KING INCH’S ROAD

M8 Motor way / Glasgow Airport / City Centre


Glasgow is a major retail location, second only to London in the UK, with over half a million square metres of retail space and a shopping population of 1.841 million. Glasgow is also featured in the top 20 super league of major European shopping destinations by commercial expenditure. It is one of Europe’s most dynamic cities with over £4.85bn of comparison goods spend available in the catchment area.

Glasgow is also known for its arts and cultural attractions, drawing tourists both locally and internationally. Glasgow is the 6th most visited UK city by international tourists with 2.3 million tourist trips made to the city in 2017 with a total spend of £619 million. Hotel occupancy in 2017 was up when compared to 2016 figures, peaking in September 2017 to almost 95% occupancy.

Braehead is situated approximately 4 miles west of Glasgow’s city centre and 5 miles north of Glasgow International Airport making it ideally located for communication links. Braehead is a retail and leisure destination in itself, with main attractions including the intu Braehead Shopping Centre and Soar at intu Braehead.



LOCATION

Glasgow is the cultural, sporting and academic heart of Scotland and is fast becoming one of Europe’s most vibrant and cosmopolitan cities. It is home to 606,340 people (2016), making it Scotland’s largest city and the third largest in the UK. The entire region surrounding the conurbation has a population of approximately 2.3 million people, which is 40% of Scotland’s population, making it the fifth largest urban area in the UK.

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DUMBARTON

ALEXANDRIA

KILMALCOLM CLYDEBANK

MILNGAVIE

BEARSDEN

PAISLEY

EASTKILBRIDE

HAMILTONBEITH

RUTHERGLEN

BOTHWELL

UDDINGSTON

AIRDRIE

LARKHALLCARLUKE

POLLOK

KIRKINTILLOCH

KILSYTH

CUMBERNAULD

FALKIRK

STENHOUSEMUIR

MOTHERWELL

SHOTTSGLASGOW

WATERFOOT

WESTWOOD

BRAEHEAD


SITUATION

Braehead is located in the Renfrew area of Glasgow, on the south bank of the River Clyde. It is particularly well known for intu Braehead Shopping Centre and Soar at intu Braehead which comprise:

�150 retail stores in over 1,000,000 sq.ft of accommodation.

�Snow Factor – the UK’s longest year round indoor snow resort.

�High quality leisure offering, including tenpin bowling, climbing wall, Odeon Cinema with IMAX screen, laser station and numerous restaurants and bars.

The property is ideally located just 3 minutes’ drive from junction 26 of the M8 motorway and a short 15-minute journey from Glasgow International Airport, which provides significant hotel demand.

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Additional demand drivers in the immediate area include:

�Queen Elizabeth University Hospital – located within 3.3 miles (9-minute drive). A 1,677 bed hospital - one of the largest acute hospitals in the UK and home to major specialist services such as renal medicine, transplantation and vascular surgery.

�Ibrox Stadium – located within 3.8 miles (9-minute drive). Capacity of 50,800 and home to Glasgow Rangers Football Club.

�Scotstoun Stadium – located within 4.7 miles (11-minute drive). Capacity of 9,700, home to Glasgow Warriors Rugby and regularly used for premier athletics events, including the 2014 Commonwealth Games.

�Multi-award winning Riverside Museum – located within 5.1 miles (12-minute drive). Home to the Glasgow Museum of Transport, attracting over 1,100,000 visitors per year, making it the 5th most popular tourist attraction in Scotland.

�Kelvingrove Art Gallery & Museum – located within 5.8 miles (16-minute drive). Attracting over 1,200,000 visitors per year, it is Scotland’s 4th most popular tourist attraction.

�SSE Hydro – located within 6.1 miles (16-minute drive). New arena with a capacity of 13,000, attracting over 1,000,000 visitors annually. In 2017 the SSE Hydro was the 4th busiest Arena in the World.Travelodge G L A S G O W

‘ B R A E H E A D ’


Travelodge




BY CAR

The property is ideally located within 3 minutes’ drive of the M8 motorway from Junction 26 (travelling west) and from Junction 25a (travelling east).

BY BUS

There is a dedicated bus station located at the intu Braehead shopping centre with regular services running from Glasgow, Paisley and wider Renfrewshire and the Inverclyde areas. There is also a direct bus link to Glasgow International Airport which runs every hour and is a 15-minute drive away.

BY TRAIN

There are bus links to various rail and subway stations including Paisley Gilmour Street, Glasgow Central/Queen Street, Partick and Govan subway.

BY AIR

Glasgow International Airport is located 4 miles west of the property, linking Glasgow to all major UK, European and International destinations. Glasgow International, offers regular domestic, European, Far East and Trans-Atlantic flights. Glasgow is the eighth busiest airport in the UK, with over 7.4 million passengers and 104,000 aircraft movements recorded each year.

COMMUNICATIONS

Braehead is located 4 miles west of Glasgow city centre and offers excellent transport links.

NEW YORK6 hours 30 minutes

PARIS1 hour 30 minutes

LONDON1 hour 10 minutes

AMSTERDAM1 hour 30 minutes

BERLIN2 hours

DUBAI7 hours 25 minutes

ROME3 hours

MANCHESTER

3 hours 20 minutes3 hours 40 minutes

BIRMINGHAM


ABERDEEN


EDINBURGH

50 minutes1 hour

LONDON


NEWCASTLE


GLASGOW INT. AIRPORT15 minutes

ABERDEEN

25 minutes17 minutes

GLASGOW

BRAEHEAD


DESCRIPTION

The hotel was completed in August 2008 and comprises a 99-bedroom hotel with café and reception.

The hotel was purpose built for Travelodge and extends over ground, first, second and third floors and as configured in an ‘L’ shape. To the rear of the property, there are 101 secure car parking spaces.

The hotel benefits from a Trip Advisor rating of 4/5, with some key comments:



Excellent location whether your stay be shopping, concert, football or holiday. Literally 10 mins’ drive from SSE Hydro and city centre.

“Booked for girls shopping trip. Excellent value, great breakfast, kids ate free, friendly and helpful staff. Excellent location for shops and restaurants at Braehead. Would recommend and will definitely stay again for this type of trip.

This hotel could not be in a better location. Plenty to do within walking distance. ‘INTU shopping centre’ and ‘Snow Factor’ are just a stone’s throw away. You can also reach the city centre within half an hour via First Bus.

Bright, quiet Travelodge, next door to Braeside “Soar” - large leisure complex with restaurants and ski slope. Also 500m from Braeside Intu shopping centre, 10-minute walk from IKEA. Easy access to motorway and city centre.




TENURE

Heritable tenure (Scottish equivalent of English Freehold).

EPC

The property has an EPC Rating of E. The comparative rating under the England & Wales methodology is B.

TENANCY

The property is fully let to Travelodge Hotels Limited as follows:

The current lease is drawn on full repairing and insuring terms for a period of 25 years from 18th August 2008, expiring on 17th August 2033. In addition, the landlord has an option to extend the lease until 3rd April 2039, effectively providing a total unexpired lease term of 21.2 years. The tenant also has an option to extend the lease for a further 25 years from 18th August 2033.

The current passing rent is £395,889 per annum, equating to £3,999 per room.

The rent is to be reviewed 5 yearly, upwards only, linked to the Retail Prices Index (RPI) and uncapped. The next review is due on 18th August 2018, with the appropriate RPI to be published in June 2018. We have based our assumptions on the actual June 2017 RPI index (272.3) and forecast the RPI for June 2018 to be 283.51 or 4.11% pa (which is the current rolling annual RPI rate). Accordingly, we have estimated the rent in August 2018 will increase to £449,494 per annum, reflecting £4,540 per room.

SITE

The site extends to approximately 1.09 acres (0.44 Hectares), measured from Promap. The site boundary can be seen from the OS extract above (please note green box which indicated substation owned by Scottish Hydro Electric):




TENANT COVENANT

Travelodge was the first budget hotel brand to launch in the UK in 1985. It now operates over 543 hotels with over 40,800 rooms. The company is one of the UK’s largest and fastest growing independent hotel groups and is the second largest hotel brand in the UK with 30.4% of the UK budget hotel sector.

Travelodge is owned by Goldentree Asset Management, Avenue Capital and Goldman Sachs following a transfer of ownership in October 2012. The new owners have invested significantly in refurbishing their estate, embarking on a £100m modernisation programme. This resulted in immediate improvements to total revenues, up 25% and profit up by 218% between 2012 and 2014. The company benefited from record customer numbers and further growth from new hotels in 2015. Similarly, between 2013 and 2016 RevPAR increased by 33% whilst the EBITDA of £101.9m in the 2015 accounts was the highest recorded in the company’s 30-year history.

The brand offers a ‘value for money’ limited service hotel, which not only appeals to leisure users but also business customers with many large corporates, including FTSE-100 companies, using Travelodge. In 2016 business customers exceeded leisure users for the first time, a trend that Travelodge will seek to continue to ensure sustainable cashflow.

Travelodge Hotels Ltd (Company No: 00769170) has a D & B Rating of 5A1, indicating ‘minimum risk of business failure’. They have reported the following audited financial results for last year:

31 Dec 2016

Sales Turnover £587,700,000

EBITDA £106,400,000

Pre-tax profits (loss) £48,800,000

Shareholders’ funds £271,600,000




HOTEL MARKET ANDTOURISM IN GLASGOW

Glasgow is one of Europe’s most vibrant and diverse destinations, and is recognised as a world-class city in which to live, work, study, invest, meet and visit. The city is Scotland’s cultural powerhouse. It is home to the largest cultural offer and the largest sporting infrastructure outside London.

Glasgow is a successful tourism destination, attracting over two million tourists per year, spending £482 million. On an annual basis, the city also attracts 20 million day visitors with an expenditure of approximately £1 billion.

Glasgow is recognised as having the UK’s Best Convention Bureau, is one of the world’s top five cities for sporting events, and in the SSE Hydro, has the 4th busiest entertainment arena in the world.

To strengthen Glasgow’s image, reputation and market share, the city has reviewed its approach to tourism development, and will prioritise the day visitor and overnight tourism markets. It is the city’s ambition to grow the economy by increasing overnight leisure tourism visits by one million over the next seven years. Achieving three million overnight visits per year by 2023, will deliver an associated spend of £771 million, and contribute an additional 6,600 jobs in the city. This plan will also help deliver Scotland’s target of an additional £1 billion of visitor expenditure per year by 2020.

INVESTMENT RATIONALE

This is a rare opportunity to invest in a high quality hotel investment offering secure long term income, linked to RPI, and located in an important regional city, which offers growth potential.

Notable investment characteristics are as follows:

Glasgow is a strong trading city for hotels with good demand from a broad customer base.

�Strategically located hotel, situated 4 miles west of Glasgow city centre and in close proximity to numerous business and leisure demand drivers.

�Strong tenant covenant and highly recognised hotel brand.

�Secure investment with a long unexpired lease term with rental uplifts linked to RPI.

�Immediate rental reversion in August 2018.



1 5 0 K I N G S I N C H R OA D , B RA E H E A D , G L A S G O W, PA 4 8 Z L

© Crown Copyright 2018. All rights reserved. Promap licence number 100020449. Jones Lang LaSalle licence number 100017659. This plan is published for the convenience of identification only and although believed to be correct is not guaranteed and it does not form any part of any contract.Disclaimer - JLL for themselves and for the vendors or lessors of this property whose agents they are, give notice that:-a. the particulars are set out as a general outline only for guidance and do not constitute, nor constitute part of, an offer or contract; b. all descriptions, dimensions, references to condition and necessary permissions for use and occupation, and other details are believed to be correct, but any intending purchasers, tenants or third parties should not rely on them as statements or representations of fact but satisfy themselves that they are correct by inspection or otherwise; c. no person in the employment of JLL has any authority to make or give any representation or warranty whatever in relation to the property; d. Any images may be computer generated. Any photographs show only certain parts of the property as they appeared at the time they were taken. For properties in Scotland: e. This correspondence is expressly subject to completion of formal legal missives in accordance with Scots Law Copyright © Jones Lang LaSalle IP Inc. March 2018. All rights reserved.

VATThe property is elected for the purposes of VAT and as such we anticipate the transaction to be treated as a Transfer of Going Concern (TOGC).

PRICEOffers are invited in excess of £7,000,000 (Seven Million Pounds Sterling) subject to contract and exclusive of VAT. This reflects a net initial yield of 5.33% and forecast reversionary yield in August 2018 of 6.05%, after purchaser’s costs at 6.16%.

DATAROOMAccess to a dataroom containing Lease & Title documentation and an assignable Building survey is available to seriously interested parties.

ASSOCIATED SALESThe property is available to purchase in isolation or as part of a three property portfolio including Premier Inn, Huntly Street, Inverness and Travelodge, Justice Mill Lane, Aberdeen.

FURTHER INFORMATION

For further information or access to the dataroom, please contact:

KERR YOUNG

0207 852 [email protected]

JANEY DOUGLAS


COLIN FINLAYSON


ALASDAIR HUMPHERY


mailto:[email protected]




LONG SECURE HOTEL INVESTMENT IN GLASGOW /1 ......AEADRA KILMACOLM CYDEBA AE BEARDE PAEY EA BRDE...

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