600600p846EDNmainthe-rivenhall-hotel-mortgage-case-study

Commercial property lending case study – Rivenhall

The Objective

Mark Venkatasami a proven health-care operator, wished to diversify into the hotel sector to provide additional health-care related services and conference facilities rather than hiring these facilities from nearby hotels and conference venues, he decided that a hotel would offer synergy with his existing business interests.

Mark offered on the Rivenhall Hotel and Spa which was accepted by the joint administrators, subject to hotel finance.

The Solution

  • As the concern was in administration, no accounts or warranties could be offered. As a consequence, securing hotel lending would be on a closed value (bricks & mortar), rather than off open market value, which would have required a high deposit.
  • As the disparity between open and closed values was substantial, the commercial property lenders agreed to take a charge over other assets to secure the debt quantum required to proceed with purchase, without the need for personal guarantees.

The Result

The hotel finance deal offered enabled Mark to purchase Rivenhall at a competitive price over a term of 20 years with an initial 5 year fix to provide certainty in regard to debt service. The deal went forward on the fixed rate for the initial term, thereafter reverting to a standard variable rate.

Given the administration process and the declining revenue, standard debt servicing criteria would not have been met. Stewart Hindley & Partners proposed an elegant solution that met the lenders criteria and reduced the deposit required.

This allowed for additional capital to be invested into the business, rather than making weight with bank debt.

Stewart Hindley & Partners:

  • undertook the whole debt raising process and
  • prepared forensic accounting services to substantiate the trade undertaken at Rivenhall for the purpose of the lenders debt servicing requirements
  • carrying this out on their standard “no win no fee” terms, despite the substantial up-front professional fees incurred in their debt submission to the lenders. Other brokers had demanded up-front fees given the difficulty of securing the quantum of debt required.

Comments

All in all a successful outcome from a professional team of industry experienced accountants and brokers with real “hands on” operational experience. Stewart Hindley & Partners provided a high degree of confidence to all parties concerned in this challenging transaction.

Mark Venkatasami
Rivenhall Hotel & Spa

http://www.rivenhallhotel.com/