FRP Real Estate Advisory arranges £95m high street funding for South West hotel portfolio

FRP Real Estate Advisory has completed a £95m facilities package from a high street bank secured against a portfolio of three owner-operated hotels in the South West.

The transaction was led by Cameron Hayes, director at FRP Real Estate Advisory, on behalf of a privately owned hotel group and client.

The hotel portfolio comprises one established, fully operational site alongside two recently refurbished hotels currently stabilising and ramping up trading.

The facility comprises a £75m bilateral loan on a five-year commitment, refinancing the incumbent lender, together with a further £10m committed accordion to be released as the two newly refurbished hotels open and stabilise.

The loan is structured on an interest-only basis with a bullet repayment at the end of the commitment term.

Margin ratchets from 1.9% above SONIA at leverage above 9.5x down to 1.6% above SONIA once leverage falls below 7x, with the same pricing mechanics applying to the accordion.

The mandate began as a mezzanine financing request, and FRP ran a full process across the mezzanine and whole loan markets before concluding that a senior structure with an accordion mechanism delivered materially better value.

“With a borrower of this calibre, options were never the constraint — selecting the right structure was,” said Cameron.

“We explored several routes before arriving at a senior facility with a committed accordion, which gives the client capital as value builds rather than requiring them to pay for it upfront.

“Long-standing relationships with the lender’s hotel team were central to getting a structure of this complexity agreed at pace.

“This is our fourth transaction with the client, and it’s a genuine pleasure to keep supporting a business with this much ambition.”