Hotel and hospitality finance

We offer a range of services in hospitality:
a) Sale and purchase of hotels and similar lodging facilities
b) Financing purchase of or investment in hotels and similar lodging facilities
c) Financing construction and development of hotels and other lodging facilities
d) Sale, purchase, privatisation and financing destination spa and health spa facilities (sanus per aquam)

We combine our hotel and hospitality expertise and experience with our knowledge and experience in real estate finance and corporate finance.

Financing hotel construction and development

We offer a range of comprehensive services to hotel developers or investors in new hotel development ventures. In our analysis, the usual starting point is the feasibility study or market research study, whatever is available. It is utmost essential to understand and analyse the entire funding needs of the hotel development in all its phases-from land acquisition to construction, pre-operating expenses and stabilising period and subsequent financial performance since they are all relevant for debt funding repayment and equity funding profit returns.

  • Comprehensive due diligence of the proposed hotel development
  • Business/investment plan preparation for the intended hotel development
  • Preparation of the hotel development funding model- for financing construction, pre-opening expenses and stabilising years operational shortfall funding
  • Analysis of the hotel investment metrics - equity multiple, IRR, NPV, key financial ratios-liquidity, leverage, profitability and other project development ratios and other project statistics
  • Project or investment risk analysis - scenario analysis, sensitivity analysis, break-even, time series, Monte Carlo simulation, regression analysis
  • Preparation of the financial projections for the intended hotel development
  • Hotel project proforma (cash flow projections) preparation
  • Discounted Cash Flow Analysis
  • Sources (equity, debt or hybrid capital) and uses of funds statement preparation
  • Tax efficient investment and funding structure
  • Risk allocation and risk adjusted returns
  • Joint venture profit distribution waterfall modelling based on IRR level, investor equity multiple and a residual cash flow split criteria
  • Capital costs modelling
  • Project finance debt sizing and sculpting
  • S curve modelling
  • Construction budget, construction funds sources and uses
  • Debt Service Coverage Ratio (DSCR), Debt Service Reserve Account (DSRA), Maintenance Reserve Account (MRA) analysis and modelling
  • Short term [construction] financing, long term permanent financing, mini-perm loan (bridge loans)
  • Junior loan, senior loan, mezzanine
  • Construction loans and RE investment loans
  • Drafting usual documentation for marketing the project to investors or lenders-teaser, offering memorandum, term sheet proposal,
  • Term sheet interpretation and negotiation with lenders, offer (binding commitment letter) negotiation assistance
  • Recourse and non-recourse finance, terms and conditions under which a non-recourse converts to a recourse loan (“bad behaviour” clauses) negotiation support
  • All other necessary support until the successful financial construction of the intended development closing

Hotel refinancing services

The need for hotel refinancing may occur in several likely situations.

  • When a newly developed hotel needs to refinance its short-term construction loan with a mini perm (bridging) loan or a long-term permanent loan
  • Refinancing of the existing loan with a loan under better terms and conditions (extension of the repayment period, extension of the grace period, lower interest rates, renegotiation of the restrictive loan covenants etc)
  • Refinancing of the existing debt burden with convertible loans or equity capital to mitigate the possibility of debt service default