Commercial property company Orchard Street Investment Management has acquired two hotel investments in Newcastle from Union Property Development for £38m.
The transaction involves the 120-bedroom Travelodge Quayside hotel and the forward funding for the development of a 161-bedrooom Melia hotel.
The Travelodge Quayside hotel opened in November 2017 and features a restaurant and bar. The budget brand has let the building for 25 years, with inflation-linked rent reviews every five years.
Underground parking for 43 cars will be shared with the adjacent Meliá hotel, which is due for completion in summer 2020 and feature a restaurant, bar, fitness suite and conference facilities. The hotel will be operated by Meliá's urban lifestyle Innside brand and has been let under the same arrangement as the Travelodge hotel.
Raj Sehgal, managing director of Union Property Development, said: "We are thrilled to have completed these transactions with Orchard Street and are proud to be able to bring high-quality developments such as the new Travelodge and Meliá Innside hotels to Newcastle; which in turn will create jobs and bring this prime area of the city to life."
Harry Buxton, acquisitions manager at Orchard Street, added: "Newcastle's appeal as a business and tourist destination continues to strengthen. These acquisitions provide a strong foothold in Newcastle's hotel market and, with the hotels benefiting from high-quality covenants and long-lease terms with minimum rental uplifts, the assets will provide stable income returns for our client."
Travelodge is the UK's second largest hotel brand after Premier Inn, with more than 560 hotels.
Spanish hotel group Meliá Hotels International currently has three UK hotels: the 581-bedroom Meliá White House in Regent's Park, London; the 157-bedroom ME London, on Aldwych; and the 208-bedroom Innside Manchester. The 200-bedroom Innside Liverpool is due to open next year.