The brokerage was appointed to advise on the restructure of a serviced accommodation portfolio located across four buildings and all inside the City of London.

The portfolio comprised 68 fully-furnished apartments with a value of just under £60m and debt just shy of £40m. 

Since lockdown, performance had fallen in line with the market and the financial covenants needed to be reset to reflect the market moving forward.

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Initial discussions between both lender and borrower showed a willingness to agree appropriate terms to allow the income at the properties to recover while ensuring interest was serviced monthly. 

Peritus and the borrower were able to negotiate:

• a covenant waiver for 15 months,
• a ‘soft’ test period for a further 12 months after the waiver period
• an ability for the borrower to still withdraw income from the portfolio
• revisions to how covenants are calculated to make compliance simpler and without risks of default.

Peritus worked with Oliver Bretherton at Gunner Cooke to document and complete the revised facility documents.

Steven Oliver, COO at Peritus Corporate Finance, said: “This was a complicated restructure given the asset class and performance in the hotel and leisure markets. 

“Both lender and borrower were realistic about performance in the short term, but knew the business fundamentals remained sound.  

“By looking at different options to drive income, by having a laser focus on costs and by allowing a change in strategy to allow short-term lets via more traditional AST leases, we created a sustainable proposition for the lender and created much needed breathing space from financial covenants for the borrower.”