• Attractive hotel & office investment

• Primarily (85%) let to Travelodge Hotels in effect to Feb 2041

• Lease to Travelodge Hotels provides for Uncapped RPI rent increases

• Zero value allocated to vacant office element

• Freehold

• £2,525,000, subject to contract

• 6.5% True Net Initial Yield

• Low capital value of £603 per sq metre / £56 per sq ft

Exchange House is situated close to Carlisle city centre and within the immediate vicinity of the new Cumbria County Council headquarters building and the English Gate Plaza leisure and office complex. Carlisle Railway Station is in close proximity.

English Street which is the prime retail destination for the city, is less than a five minute walk to the west and home to various national retailers including Boots, Marks & Spencer, River Island, Joules, White Stuff and WHSmith.

The subject property is also in close proximity to The Lanes Shopping Centre which provides over 60 retail and restaurant units with many of the national, multiple high street retailers present. These include Primark, Next, River Island, JD Sports and New Look. There is also dedicated car parking for 600 vehicles.

The subject property comprises a 61 bedroom Travelodge hotel arranged over basement, ground and four upper floors, along with offices at1st floor level and a self-contained ground floor dental surgery.

We draw your attention to the Asbestos Reinstatement Report of December 2021 which can be found in the dataroom, advising of the presence of asbestos in a basement boiler room.

Freehold.

Hotel

The hotel is let to Travelodge Hotels Limited on effectively a full repairing and insuring lease from 7th April 2008 and expiring on 6th April 2033. As part of Travelodge’s CVA arrangements the landlord has the option to grant a reversionary lease to Travelodge extending the term through to 18th February 2041. Hence, there are in effect approximately 19 years remaining on the occupational lease.

The lease is subject to rent reviews based upon increases in the Retail Price Index without any caps. The last rent review was 7th April 2018 at which time the rent was set at £170,739 per annum. The next rent review occurs 7th April 2023 and five yearly thereafter. Note that as part of the recent CVA, the rent was reduced to 70% of the contracted rent during 2021.

There are no tenant arrears (statement 23rd Feb 2022)

Offices

The office accommodation is currently vacant and has been on the market at quoting rent of £12,000 per annum - £21.72 per sq metre / £2.0 per sq ft.

Dental Surgery

The dental surgery is let to Oasis Dental Care (Central) Limited on effectively a full repairing and insuring lease from 29th July 2010 until 28th July 2030. The lease ended 28th July 2025 but was extended on 7th February 2020 in return for granting the tenant 24 months’ rent at half rent. The lease is not subject to rent review.

The rent under the lease is £30,000 per annum (£91.74 per sq ft / £8.52 per sq ft).

Note that rooftop telecommunications equipment was previously let to Telefonica at £12,500 per annum.

Summary

Therefore, an investor will benefit from a total gross income of £200,739 per annum.  

The income for an investor will increase once the vacant office is let.

The property has been registered for VAT. It is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC).

1. The property provides 20 years of income from Travelodge Hotels Limited;

2. The rent increases from Travelodge are based upon increases in the Retail Price Index, uncapped;

3. A purchase at the asking price reflects an attractive true net yield of 6.5% and a low capital value of £603 per sq metre / £56 per sq ft;

4. Our analysis of the asking price attaches zero value to the vacant offices, providing an opportunity to enhance value;

5. We suggest there is an opportunity to potentially increase the income by letting the roof to a telecommunications company.

Please note that the photographs were shot in 2020.

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