As part of our series of regular case study updates, we have provided an example of a recently completed loan secured against a guest house in Scotland.
Our expertise in hotel lending is evident in this case study, along with our ability to integrate offshore financing into the final deal.
Deal scenario
Our clients were looking to purchase a 14-bedroom guesthouse in Pitlochry, Scotland for £1.09 million.
They sought a loan of £650,000 over 24 months, to be serviced from commencement as the guesthouse was well-established with a good level of historic trade to evidence affordability.
The borrowing group included two UK residents, although equity was also being introduced by a French national residing in the Middle East.
The clients planned to further enhance the business by increasing the room count to 16 and reducing business overheads.
Our lending solution
The borrowing group had limited direct hotel sector experience, so we had to get comfortable with their general business acumen and the strength of the well-structured business plan they presented.
Our underwriters were comfortable with the historic and projected trading figures in the plan, as the clients demonstrated the ability to service our loan facility and support a subsequent exit onto a term mortgage.
Furthermore, our flexible lending facility will permit the clients’ asset management strategy, which involves adding value to the hotel by increasing the number of rooms.
Building a track record of operations in the UK will enable more mainstream financing to become available to the clients.
Outcome
Ortus Relationship Director, Mel Howard, said: “Supporting hotel operators doesn’t always require a specialist solution because trade needs to be improved. At Ortus, we frequently work with sophisticated borrowing structures which involve equity being introduced from overseas. This presents a significant source of wealth challenge.
“We are well drilled at working with offshore entities and structures so it was a pleasure to work on this facility, which would have been out of reach for many bank lenders.”
Get in touch
If you’d like to talk to us about our commercial lending proposition and how we can help you and your clients, speak to the Relationship Director in your local office.
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Beyond Bridges: The next step for borrowers and investors
“This expansion in Ortus’ product range is part of our ongoing effort to serve our loyal clients and introducers. We have had a particular focus on commercial property since our inception and providing 5-year commercial loans was the next logical step in growing our offering. This product now enables us to help borrowers and investors for the next step beyond a bridging or acquisition loan.”
