An 83-room, Travelodge Plus hotel opened in June 2019. Travelodge acted as the developer of this standalone hotel development, with the works being forward funded by a UK Pension Fund and the transaction included an Income Strip deal with the Council
Occasionally, Travelodge will act in a developer role, undertaking a hotel project, forward funded by an end investor. This is done where a scheme will not be financially viable under a standard developer-led model.
Opening in June 2019, the Marlow Travelodge is a good, recent example of one such project.
The site forms part of the Globe Business Park, on the edge of the town centre and half a mile from Marlow Railway Station.
Formerly occupied under a lease by Cobham PLC, the site is owned by Wycombe District Council, which agreed a surrender of the lease over the site with the aim of creating a long-term income stream for the Council without incurring significant capital expenditure.
Located in the heart of the commercial district, but also a short, safe and level walk from both the River Thames and Marlow town centre, with its excellent retail and restaurant offers, this was an ideal location for a new Travelodge. Given the objectives and cash constraints of the Council, there was no opportunity to progress a normal mixed-use development. We therefore worked alongside a leading UK Pension Fund to propose an innovative structure involving a sub-underlease deal with Wycombe District Council of part of the site, with the Pension Fund entering into a long-leasehold interest of the whole site and then forward funding the development works undertaken by Travelodge. The benefit of this structure for the Council was not only the delivery of a new Travelodge hotel for the town, with all of the associated benefits that this brings, but also the security of two, index-linked income streams from this site, through the leases created upon completion of the new development.
The Pension Fund benefitted from an institutional lease of a brand new Travelodge hotel, developed by Travelodge on time and on budget, which delivered the fund’s required criteria for long-term, secure, well-let income. Travelodge and the Fund split the planning and survey costs before securing planning approval and a fixed-price construction contract to build the consented scheme was agreed. The complex structure we used here involved seven different legal documents to deliver the scheme, over a period spanning five years from the initial meeting with the District Council.
Given that the Marlow area attracts business and affluent leisure customers, the new hotel was built to Travelodge Plus specification and Travelodge used one of our partnering contractors, Barnes Construction Limited, to construct the hotel on a forward funded basis with the required sums drawn down from the Pension Fund via an escrow account, on a monthly basis in line with QS certified valuations.
Throughout the project we worked closely with a well-established, local gym operator called The Marlow Club, based opposite the new Travelodge, to ensure that our scheme was complementary to their project for a new decked car park for their members use. The Club entered into a lease with Wycombe District Council on the northern part of the site and constructed a new surface car park for the Council to let to local businesses on Globe Business Park and this final element of the project opened a few months after the hotel opened for trade. This completed the re-development of this once-derelict site that had a history of illegal occupation by caravans etc. and the Council’s objectives have been well and truly achieved. So, an all-round success story for all parties involved.
Rooms at the Marlow Travelodge Plus can be booked at www.travelodge.co.uk.
For more information about forward funded or Council-partnership deals, please contact our Development Managers responsible for the region in which the opportunity is located.
Further details about our Marlow transaction can be obtained from John Hardy, our Development Manager for this deal, on 07767 768 949.