PBL146 - A Hotel in Hartlepool - Repaid

The valuation report includes the annual profit from the hotel, which is several times greater than that required to pay the interest on the loan. I think that is a valid justification for considering this a lower risk loan, and floating it at a lower interest rate. If you take the going concern valuation the LTV is under 50%, and the going concern valuation struck me as conservative (though I am more familiar with valuations for quoted companies, and the earnings multiple does seem to run lower for private companies).

The two issues that I see are 

1) The legalities of perfecting the security, as the property is owned by a limited liability company and the loan is to an individual (even if the individual is or is soon to be the sole shareholder in the company).
2) The lack of clarity about the ownership of the company, as mentioned under the Pipeline Loans topic, and the consequent lack of clarity about the purpose of the loan.

If I recall correctly the first issue came up with a loan at MT, and MT provided an explanation; unfortunately my recollection doesn't extend to what the explanation was.

Could savingstream provide an explanation of the first point for those of us who aren't experts in the relevant bits of the law, and clarify the ownership/history of the property, please?

PS: There may not be many hotels of that value in the town, so the moderators might prefer a less precise description, such as North East Hotel.

Update:

Rereading the details, I see that the statement is "The purpose of the loan is to purchase the property in to the Borrower's sole name. The effect of this will be that the other shareholders in the Company are being bought out." If this translates to that a director, in a related party transaction, is purchasing the property from the company, this moots the first issue. I see that, as was noted on the Pipeline Loans topic, that RateSetter has a charge on the property. Presumably this means that the company will apply part of the proceeds to repaying the RateSetter loan and lifting the current charge.

Will the borrower run the hotel as a sole trader, or will the company continue to operate the hotel, paying rent to the borrower? Will there be a return of capital from the company?

"The hotel business is currently trading with a net profit of c£530k and gross turnover of c£1.7m"

Anyone ever heard of a hotel making 31% net profit on turnover??

Any estimate of the real profit?

Well having had a rummage around at companies house and despite the figures in the valuation  i can't help seeing this loan as a rescue of a rescue package of some sort, rather than anything positive.  Another hotel went into CVA in 2014 with liquidator appointed in May 2016

Not 10% material for me.

Could savingstream comment on this borrowers habit of liquidating hotels, latest may 2016 in the same area.

Bound to say its only the security that counts, but i don't think so.

+1