Hotel / Motel Solutions
Example Solution: Freehold Hotel
Mark has been in the hotel industry for 15 years and currently owns and operates two hotels. He has recently seen an opportunity to purchase a third hotel, which is old, tired and poorly run. He sees this as a fantastic opportunity to purchase this hotel fairly cheaply and recognises significant upside potential for an experienced operator such as himself.
Financing this purchase will however be a bit of a stretch in the short term, as Mark will need to gear up against his existing hotels and the hotel being purchased. Mark therefore needs a lender that will:
- fully appreciate the going concern value of each of the three hotels and provide an acceptable loan to valuation ratio
- understand the need to provide an additional $500,000 to renovate and refurbish the new hotel
- accept his cash flow projections for the newly purchased and renovated hotel
Example Solution: Leasehold Hotel
Leon has worked in the hotel industry for over 10 years, working his way up to a hotel manager position. His goal has always been to run his own hotel business and a leasehold hotel has just come on the market. This suits Leon as it is a much smaller capital outlay than a going concern business, which he could not afford.
Leon has negotiated a purchase price of $800,000 on the hotel business that has 12 years to run on the lease. To fund this purchase, Leon needs a lender that understands the leasehold nature of the business and will lend against it and one that will acknowledge his industry expertise and business plan.
After assessing his options, Leon has decided to go with Members Equity Bank which will lend him 60% of the value of the business and will take additional security against the equity he has in his home.
Fees and charges apply. Terms and conditions available on request. Applications are subject to credit approval.
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