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Case Study

Acquisition finance with sculpted amortisation for new build hotel

PE house with a forward commitment to acquire a hotel at practical completion, required amortisation IRR and cash-on-cash yield.
  • Enhanced

    Cash-on-Cash Yield

  • Amount 60% LTV
  • Early Repayment

    Waived after 3 year hold

Deal Outline


  • £34 million hotel


  • First legal charge on hotel


  • Operating income (but none proven as new build)


  • £20m at 60% LTV
  • 5 year term
  • Bespoke repayment profile


  • New to market
  • No proven trading history
  • Considerable new supply in area

Facility Secured

  • £20m at 60% LTV
  • Sculpted amortisation, providing enhanced cash-on-cash yield


Our client, a PE investment house, required finance for its forward commitment to purchase a London hotel following its practical completion. The client, with an extensive UK portfolio, had a strong track record of hands on, active management, and planned to manage the hotel with a specialist hotel operating partner, under a franchise agreement.


We performed detailed cashflow and stress-testing analysis on the prospective trading figures to demonstrate the asset’s ability to support the funding sought, despite its lack of track record. By sculpting the amortisation profile in a progressive nature, we secured funding for a 60% LTV facility which achieved a more stable and enhanced cash-on-cash yield (8-9%) over the term versus the outturn from the client’s incumbent lender’s terms.


A 5 year term facility was secured which allowed full prepayment after a 3 year hold period with no early repayment penalties.


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