Near Howe Holiday Cottages – Lifestyle Change During The Pandemic

Strong Holiday Letting Business

Our clients, Fiona and Mark Shore, decided to take the leap and buy a self-catering holiday cottage letting business in the Lake District National Park having decided on a “life style” change from their location in the Home Counties.

Near Howe, marketed by Colliers International, presented a unique opportunity and perfect fit for Fiona and Mark’s “life style” change, and as Near Howe’s business was accommodation led, with an established trade and well-presented and maintained self-catering cottages as a result there was no need to embark on a steep learning curve had the business been food and beverage led.

How to secure a commercial mortgage

The real challenge Fiona and Mark faced was securing a commercial mortgage to assist them with the purchase of Near Howe, particularly during the pandemic, when the business was closed.

To realise their dream of owning a life style business, Stewart Hindley & Partners were introduced by Colliers International, to Fiona and Mark to provide a commercial mortgage solution to assist with their purchase on the most competitive terms available.

As with all “new to trade operators” commercial mortgage lenders’ are risk adverse, particularly so when the trade is being disrupted due to the pandemic, so this wasn’t one for the High Street. As a consequence, a specialist lender was identified, who had appetite to lend on prime lending terms and interest rates despite the challenges the purchase of Near Howe represented and the transaction process was fully completed within 3 months.

Successful mortgage outcome

During the transaction process, Stewart Hindley continuously engaged throughout the process with all stakeholders, which included the Vendors, Sales Agents’, the Commercial Valuers’ and all sides’ Legal Representatives and of course the Lender to ensure a successful and timely outcome.

Fiona and Mark completed on Near Howe in early February and all of the team at Stewart Hindley wish them every success for the future.


What Fiona & Mark have to say about Stewart Hindley:

“We would like to thank Stewart Hindley, particularly Chris McDonagh for their advice and support.  They were in constant contact throughout the process, providing us with advice from the initial viewing process right the way through to contract exchange. Without their help and support I don’t think we would have been able to purchase Near Howe and be where we are today.  We would recommend Stewart Hindley to anyone else thinking of making a similar lifestyle change. “

Cotswold Hotel Portfolio – Debt Restructuring

Hotel debt restructuring

Our client is a successful and proven hospitality operator with an outstanding career in the Corporate Hotel sector prior to acquiring a portfolio of 3 mid-market distinctive hotels providing quality accommodation, food and beverage service in the Cotswolds.

The acquisition of the hotel portfolio was made with the assistance of a commercial mortgage from a High St. lender based on the open market value of the portfolio and the trade goodwill.

The purchase price was below market value due to the need to extensively refurbish the hotels and the “product” to differentiate from nearby rivals and to maintain revenue attainment against forecast and the lenders’ debt service and loan to value covenants.

Unforeseen costs for hotel refurbishment

During the refurbishment programme unforeseen costs were incurred and when our client approached his lender, they refused to provide addition loan facilities by way of a working overdraft, to allow the refurbishment works to be completed.

As a result, our client turned to a subprime lender to provide the assistance he required. Unfortunately, the extra loan servicing debt burden came to the attention of our clients’ lender which resulted in a breach of debt service and loan to value covenants.

As a consequence of the covenant breach, our client was transferred to the lenders’ business support team who undertook a review of our client’s business and came to the conclusion that due to the covenant breach, our client had the option of either a non-consensual disposal of one or all of the hotels or refinancing their (the lenders’) debt.

Our client was recommended to Stewart Hindley by another operator in the nearby area whom we had previously assisted and supported in similar circumstances.

Refinancing the hotel loan

On receipt of our client’s instructions, we engaged with the lender and their professional advisors to secure the business case for the refinancing, based on an element of debt forgiveness, to meet with the new lenders’ debt servicing and loan to value metrics.

Our client’s hotels are now trading well and profitably and meet all the conditions and covenants of the new loan facilities without duress.

The byword in all of this is that you can’t guarantee that your lender will extend additional facilities when you need them, regardless of the circumstances, as a request for addition loan facilities may trigger a review of your business which may result in a covenant breach with unintended consequences.

If in doubt about your business’s financial arrangements or your relationship with your lender, speak to a debt restructuring specialist, such as Stewart Hindley and Partners, for impartial and no obligation advice.

South Yorkshire Hotel – Loan Restructuring

Loan facility review

A South Yorkshire hotel operator came into difficulty with his High St. lender when the initial term of his debt had expired.

Our client was unaware that his loan facility was subject to review after 5 years, this is referred to as the initial term loan facility, although the debt was amortised over 15 years, known as the repayment period, our client assumed that the initial term would simply “roll on” as long as he maintained his loan repayment.

This is a popular misconception, as when the lender initiates an end of initial term review, the lender requires a valuation for the purpose of their security, which doesn’t necessarily represent open market value, for the purposes of their loan to value covenant as a result this can lead to a breach of loan to value covenant.

In support of the valuation the lender will also require 3 years trading accounts and management information to date to ensure that business can meet its debt service obligations both actual and when stress tested, as well as ensuring that there are sufficient cash available within the business to service the debt then this may also lead to a breach of covenant.

Breach of covenant

As our client incurred a breach of all of these covenants he was transferred to business support which is a specialist division within all banks that decide if the business can be “turned around” and if not, as was the case with our client, they (the lender) have requested that their debt be refinanced or the property (the lenders security) disposed of either consensually or non-consensual basis.

Turnaround finance specialists

Our client opted for a refinance and after searching the internet for “turnaround finance” specialists instructed Stewart Hindley to provide a refinancing solution.

After a thorough review of our clients’ business and with the assistance of a hospitality consultant to improve the metrics and dynamics of the trade Stewart Hindley were able to provide a refinance solution on preferential terms over a fully amortising period of 25 years with an alternative High St. lender.

Understand your hotel loan

The take away from our client’s experience is to fully understand what type of loan you are being offered and don’t be reluctant to ask questions and get a full explanation from your lender if you are in any doubt as they are duty bound to act responsibly and treat their customers fairly.

If in doubt about your business loan or your relationship with your lender, speak to a debt restructuring specialist, such as Stewart Hindley and Partners, for impartial and no obligation advice.

Call us on 01488 684 834 to get help today

 

 

Hotel Refinancing – Midlands Region

Refinancing a hotel

Due to a lapse of planning convents for an external function space our client was unable to host wedding and corporate events which resulted in a significant decline in revenue.

Whilst our client immediately advised the lender of the lapse in planning consent and corresponding change in trading profile the lender wasn’t sympathetic as this compromised both debt service and LTV covenants.

This situation resulted in our client being placed in “business support” with a view to a consensual disposal which wasn’t in our client’s best interest or those of the lender.

Debt restructuring plan

After a protracted period of consideration and negotiation the lender agreed to a debt write down of 50% representing £1,500,000 which facilitated a refinancing solution provided by Stewart Hindley firstly with a near-prime lender to wash away the “toxicity” of the debt write down which was ultimately refinanced with a prime lender.

This refinance solution avoided further trade disruption to our clients’ trade and provided certainty whilst planning consents were re-instated and circumvented a potential time consuming and distressed disposal process which wouldn’t have led to a greater loss to the lender than the debt write down.

For more information on how we can help restructure your debt please call us at 01488 684 834

Or contact us today by email

Debt Restructuring – Town House Hotel – Warwickshire

Our client was in the process restructuring his hotel’s assets from a full service product, to short stay accommodation apartments, as our clients full service hotel concept with à la carte dining wasn’t sustainable due to the change in dining out preferences, which resulted in high costs and unpredictable trading, leading to a trading loss and inevitably a breach of debt service covenants.

The existing debt of £6,000,000 was disproportional to the trade and asset value and the change to short stay accommodations, although a viable proposition couldn’t service debt when stress tested and sensitised against the lenders criteria, which in-turn led to a default on debt service covenant. The reality of the situation was that the business could only service debt of £3,000,000 on a full repayment basis.

Debt restructuring solution

After working with a number of commercial valuers to ascertain distressed market values, we entered into negotiation with the lender and secured a debt write down of 50% amounting to £3,000,000 based on comparable market values. The debt write-down was initially refinanced by a specialist near prime lender which we then subsequently refinanced after 36 months to a term debt facility on standard commercial terms.

For more information on how we can help restructure your debt please get in touch

Hotel Debt Restructuring – South East England

Our client owned and operated 2 branded hotels and traded these concerns very successfully supported by his lender who is a well-known High St name. The financial crash of 2008 corresponded with the expiry of our client’s loan agreement of £3,000,000 which was written over an initial 5-year term, amortised over 20 years, on an interest only basis.

Our client’s difficulties occurred when the lender required a current valuation to extend the term of the loan for a further 15 years which was undertaken at our client’s expense. The timing couldn’t have been worse for our client as market values had plummeted for hospitality business post the crash by some 30% and as a consequence an unintended breach of Loan to Value (LTV) occurred.

The was situation was made worse by the profile of the loan which was on an interest only basis which meant that no capital was repaid during the initial term. The write down of values coupled with no capital repayment further compromised the LTV’s resulting in the debt being called in.

This gave our client cause for concern as he could see no way out other than selling his assets hotels at distressed market values which wouldn’t have paid off the principle debt.

Our client was recommended to us to restructure his business debt and secure a refinancing solution. However, given the downturn in the market post the crash our clients trade had reduced substantially to a point where the business could only service debt on a full repayment basis of £1,000,000. As a consequence, we at Stewart Hindley agreed a debt write off of £2,000,000 which enabled our client to continue trading without losing his hotels and livelihood.

The debt write-down was agreed on the basis of securing a refinancing solution in the sum of £1,000,000 with a prime lender, ahead of negotiations so as to provide a certain and secure outcome to enable the deal to proceed, which took almost 6 months to achieve with many meetings involving the existing and the new lender.

For more information on how we can help restructure your debt please get in touch

Betws-y-Coed in North Wales – It took a while but they got there!

It was 2016 when Gidon and Izabela first contacted us to discuss bed and breakfast finance. They had attended a bed and breakfast course run by Karen Thorne at Hopton House in Shropshire and had decided to buy a bed and breakfast in the Shropshire area.  Unfortunately it took a while for them to sell their property and the original concern they were interested in was snapped up by another buyer.

Eventually they found a buyer and started looking again in earnest, however, this time they focused on the Lake District and North Wales (both excellent and beautiful locations!).  After a few disappointing starts they settled on Afon View in Betws-y-Coed, North Wales and their dream really started to materialise.  They completed their purchase and moved into Afon View in December 2018!

Afon View has 7 lovely letting rooms and guests are sure of a warm welcome from Gidon and Izabela.

Afon View is located in a village that attracts outdoor enthusiasts from around the world and is one of the main places to stay in Snowdonia.  Whether you are a walker, climber, kayaker, cyclist  or angler there are loads of places to visit and things to do in the area.

https://www.afon-view.co.uk/

North Devon Bed and Breakfast

Vanessa & Phillip Moyle had previously let out just one room of their house in Salcombe in South Devon and after some time decided that they wanted to use their love of meeting people and their hospitality skills to develop a business in the popular North Devon coastal village of Lynton.

They spent some time looking for the right property and eventually settled on a 4* guest house, Rockvale House.  Rockvale House had been owned for a number of years by the same people and was traded very much to suit their personal requirements.  This presented a great opportunity for Vanessa & Phillip to purchase a well-established 8 bedroomed Guest House located in the heart of Lynton and within the Exmoor National Park with great views.

As the concern had been traded for just 6 months of the year and often closed during peak times the accounts did not reflect the true potential of the business which can make it a challenge to fund from a lenders point of view.  As we, Stewart Hindley & Partners, are specialists in hospitality finance we were able to present a solid case to the lender with achievable goals and projections showing that debt service could be met.

Vanessa and Phillip completed on their purchase in December 2018 and are now looking forward to operating the business on a year round basis and sharing the beauty of North Devon and Exmoor with their guests and, of course, meeting lots of new and interesting people along the way!

If you are looking for a warm welcome, comfortable stay and panoramic views  why not choose Rockvale House on your next visit to the area!

https://rockvalelynton.com/

What Vanessa & Phillip say about Stewart Hindley & Partners….

From the first moment we contacted Stewart Hindley & Partners and spoke to Carol and then Mike Cox they could not have been more helpful, they were straight on the case working at such a speed it was brilliant.  Mike took away so much pressure and stress normally associated with a purchase like this, he spoke to us in such an open and honest way it was really refreshing.  His professionalism was superb and we are very grateful to him.  We know Carol did so much behind the scenes too.  We have no hesitation in recommending Mike Cox at Stewart Hindley & Partners 100 per cent. 

Thank you

Ness and Phil, Rockvale House

 

Boscastle B&B with Tea Rooms

Louise and Richard contacted us originally in August 2017 as they were looking to purchase a holiday lodge site.  Unfortunately this purchase didn’t progress but after much searching they found Bridge House in Boscastle, Cornwall.

Bridge House is a substantial stone property with popular tea rooms and guest accommodation.  Louise & Richard fell in love with it and decided this was the property for them so it was full steam ahead.

Stewart Hindley & Partners submitted a comprehensive loan proposal outlining Louise & Richards plans for the business going forward and including all historical and projected finance information.

After a successful bank meeting the loan was offered subject to valuation.  Valuers were appointed by the bank and valuation was undertaken and the report duly received.  Thankfully the valuation was positive and the purchase was completed after all the legal work was undertaken.

Louise & Richard moved into the property in July 2018 so had to hit the ground running over the busy Summer period.  If you need accommodation or something to eat in Boscastle you know where to get a warm welcome and a cup of tea!

http://www.bridgehouse-boscastle.co.uk/

St Ives Hotel Dunoon – 1 year on

Katia and Jonathan Smith decided they wanted to run a bed and breakfast in Scotland and after researching the areas and looking at what was available they decided to purchase the St Ives Hotel in the coastal town of Dunoon.

The hotel was in a good location being close to the sea and town facilities and had been run by the owners for 33 years.  The owners decided it was time to retire which provided Katia and Jonathan a great opportunity to purchase a going concern with plenty of potential in increase the trade.

Both Katia and Kevin worked in professional roles in London and had excellent transferable skills so although they had never run a bed and breakfast before they had great interpersonal  skills and Katia had a good level of online marketing experience which was  shown in by her work with MumsNet.

We worked closely with Katia to progress the purchase and  we are pleased to say that they began trading in August 2017 since which time they have upgraded the rooms and have achieved excellent Trip Advisor reviews including a Certificate of Excellence for 2017!  A great achievement in their first year of trading.  It is definitely the place to stay if you are in Dunoon!

Visit St Ives website  https://www.stives-hotel.co.uk/