The board of LXI REIT announced that it has exchanged contracts with Travelodge Hotels Limited on a material and accretive lease regear initiated by LXI on all of the 122 Travelodge hotels which formed part of the Secure Income REIT ("SIR") portfolio. The 12 Travelodge hotels which formed part of the LXI REIT portfolio have already been regeared or were new forward fundings. Lease extensions: In return for inserting caps and collars (4% pa and 1% pa, respectively) on the previously uncapped and uncollared RPI rent reviews and converting the reviews to CPI+0.5% pa (to future-proof them for the phasing out of the RPI by 2030), the Company has extended the unexpired lease terms on the 122 Travelodge hotels by a weighted average of nine years.

This has the effect of extending the weighted average unexpired lease term to first break ("WAULT") on the hotels from 19.5 years to 28.5 years and increasing the WAULT of the total LXI REIT portfolio from 25.6 years to 27.3 years. Following discussions with the company's Valuer, the lease extensions are anticipated to have a material positive impact on asset values and further enhance the investment attraction of the hotels. The change in rent review profile is also designed to ensure that the rents remain affordable over time and avoid becoming potentially over-rented versus market rents.

The new collars also provide uplifts in lower inflationary environments. No rent-free periods have been granted and no rent reductions have been made. Travelodge is trading robustly, with 2022 already its most profitable year on record.

Travelodge, like Premier Inn, tends to outperform during recessionary periods as both business and leisure customers are attracted to the low cost and value offered by the budget hotel brands.