Wednesday, October 5, 2016
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Trinity Specialist Finance has access to lenders providing commercial finance for hotels across the UK.
Some banks prefer lending against branded hotels in city centres, while others will consider smaller boutique hotels.
They can provide funding for commercial refinancing, developments, and acquisitions. Senior debt finance is available between £2m and £40m.
One large bank recently quoted terms for a large hotel at 2.5% over LIBOR with a 1.5% arrangement fee. The maximum loan-to-value was 60%, and the loan-to-cost was also 60%.
Aaron Strutt, product director at Trinity Specialist Finance, says: “If you are looking to purchase a hotel, the lenders will expect to know what you are buying. For example, if you are buying the freehold or the lease and how long is remaining.
“If you are buying a branded hotel, they will want to know if you will have to make royalty payments or pay a percentage of the profits. They will also ask if there is an agreement to pay for branding rights.”
Lenders prefer clients to have a track record of running hotels or at least have a management team with experience.
Trading figures and EBITDA
One of the first things Trinity's contacts at the banks will ask about is the EBITDA margin. It works out the company’s earnings before interest, depreciation, and amortization as a percentage of the total revenue.
To work out it is possible to purchase or refinance a hotel, Trinity’s advisers will need to see the trading accounts. Ideally three years.
Before submitting any application to a lender, we will also need to understand the daily room rates, occupancy levels and income generated from the food and beverage departments. Bank statement will also be required.
Competition
Many of the lenders have a huge appetite to provide finance, and they will work hard to attract clients from their competitors.
If you have other assets or investments, they can potentially take charges against term to provide larger loans or more competitive terms.
If you would like to refinance to secure a lower rate or borrow more money, Trinity can help.
Call Trinity Specialist Finance on 020 7016 6151 to secure hotel finance.
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