Real estate finance and investment house TAB has launched a new fractional ownership model called TAB Property – and it’s purchased two Travelodge hotels totalling £5m.
TAB Property allows investors to commit as little as £1,000 to part-own real estate assets and earn returns from both rental income and capital growth without necessarily having to take on debt.
TAB handles the property acquisition, management, and tenant requirements. To protect investors, TAB says it also keeps a reserve fund for unforeseen costs, such as void periods, maintenance and repairs.
The Travelodge hotel in Chigwell, Greater London was bought for £3.68m. The purpose-built property comprises 34 beds across two storeys.
The second Travelodge hotel was bought for £2.385m, located in Snaresbrook, Greater London. The 7,303 sq.ft purpose-built property sits across two storeys.
Both properties are expected to provide investors with a 7.62 per cent net yield, resulting in a total annual return of £462,000 with an additional 2.5 per cent projected capital growth.
Duncan Kreeger, chief executive and founder of TAB, says: “As an advocate for democratising real estate investment, I’m excited to introduce our latest fractional ownership product, following our acquisition of Travelodge Hotels in Chigwell and Snaresbrook.
“Our platform empowers users to tailor their property ownership to meet specific goals, allowing them to diversify their investment portfolio. We’ve crafted an intuitive, user-friendly experience aimed at widening access to property investment, enabling more individuals to tap into the returns traditionally reserved for those with substantial capital.
“Our experienced team is constantly looking for new investment opportunities, and these acquisitions are just the beginning for TAB Property.”
Before offering these initial properties to investors, TAB says it evaluated over 350 opportunities worth a combined £1 billion to ensure the fundamentals of the initial offering are strong including long-term covenants and expected capital growth.
Travelodge Hotels Ltd, is the largest hotel chain in the UK with a total revenue of just under £1 billion in 2022.
Both properties are under a Full Repairing and Insurance lease set to expire in late 2035, with an option to extend until July 2041. The commercial assets, priced at £327 psf, boast gross yields of 9.33 and 9.32 respectively, surpassing recent Travelodge transactions traded at a 7.50 per cent yield. Notably, both properties hold the potential for expanding the number of rooms.
