Level 2 Loan Security Flashcards
What was your first example?
Hotel, Epsom
Hotel, Epsom
Walk me through your SWOT analysis
Hotel, Epsom
S = location next to racecourse
W = trade fluctuates based on race schedule
O = find ways to get people in all year round e.g business conferences
T = Cost of living
Whats a REO?
Hotel, Epsom
Assumed to run the business efficiently, reflecting typical operational standards rather than exceptional circumstances.
How did you come to your view on multiple?
Hotel, Epsom
coming to a view based on comparable evidence of recent hotel transaction with similar characteristics
Why did you conclude the property was suitable for loan security?
Hotel, Epsom
What are prudent loan terms?
Hotel, Epsom
What was the strength of the operator?
Hotel, Epsom
Good - national operator with a load of hotels across the uk
Descirbe the hotel
Hotel, Epsom
- The Hotel is comprised of three floors and is of a modern composition.
- It was constructed in 2008 and, as such, no full refurbishments have completed since opening.
- The Hotel is categorised as a budget 3-star property.
- 120 rooms
How would a high flood risk influence your valuation?
Hotel, Epsom
It would be an ESG consideration which would be considered in the Valuation and reported
It would potentially have an adverse impact on investor interest and marketability and therefore would be considered in the multiple applied to the property
What state of repair was the property in?
Hotel, Epsom
- Following inspection, it was my opinion that the property is in a good state of repair. During our inspection, we did not note any major items of disrepair.
- There has been no significant Capex spent over the past 5 years.
How did you arrive at ADR / FMT
Hotel, Epsom
- I reflected an ADR of c.£100 and occupancy of 66% in line with the client’s 2024 Budget
- I deemed this appropriate based on what has historically been achieved at the property and known industry benchmarks.
What was your second example?
Holiday Park, Yorkshire
Holiday Park, Yorkshire
Describe the location
- The Property is located in the North East of England in East Riding of Yorkshire Council, approximately 15 miles to the northeast of Kingston upon Hull.
- It was located next door to a Haven Far Grange holiday park who are one of the largest corporate operators of holiday parks
Describe the holiday park
- c.130 acre site
- Offers both owner caravans and touring. 892 pitches.
- Central facilities include a swimming pool, amusement hall, bar/ restaurant, fish and chip shop, supermarket, fishing lake
- The condition of the site was fair in most places. The condition of the site was fair in most places. The central facilities would benefit from some cosmetic upgrading and areas did appear a little tired and dated
Why are coi checks particularly important? Compared to others
COI checks are always important but with loan sec it means you have to check an extra entity in the form of the borrower, even though theyre not your client.
