Waived after 3 year hold
PE house with a forward commitment to acquire a hotel at practical completion,
required amortisation profile to maximise IRR and cash-on-cash yield.
- £34 million hotel
- First legal charge on hotel
- Operating income (but none proven as new build)
- £20m at 60% LTV
- 5 year term
- Bespoke repayment profile
- New to market
- No proven trading history
- Considerable new supply in area
- 5 year term, 60% LTV
- Sculpted amortisation, providing enhanced cash-on-cash yield
Our client, a PE investment house, required finance for its forward commitment to purchase a London hotel following its practical completion. The client, with an extensive UK portfolio, had a strong track record of hands on, active management, and planned to manage the hotel with a specialist hotel operating partner, under a franchise agreement.
We performed detailed cashflow and stress-testing analysis on the prospective trading figures to demonstrate the asset’s ability to support the funding sought, despite its lack of track record. By sculpting the amortisation profile in a progressive nature, we secured funding for a 60% LTV facility which achieved a more stable and enhanced cash-on-cash yield (8-9%) over the term versus the outturn from the client’s incumbent lender’s terms.
A 5 year term facility was secured which allowed full prepayment after a 3 year hold period with no early repayment penalties.