Manchester Hotel Loan

Whilst fully amortising over the full term (3 years), note that it is a second charge which means LTV is down to 65% rather than 0% at the end of the term.

Throughout the 1990's I lived a quarter of a mile from  where this hotel is, and it was just being built (as a care home) at the time I moved out of the area. You really wouldn't want to be in that building on speedway nights, the noise was irritating enough some distance away, I dread to think what it must be like in the hotel. The dogs were slightly more bearable, but no doubt adjacent the noise would also be annoying. And you probably wouldn't want to park anything more valuable than a beaten up Lada in the car park ... the bottom of my cul de sac was a popular place for joyridders to torch BMW, Porsches etc. ... after buying their supply of drugs from one of several Mercedes cruising the neighborhood.    (So yes, a very rough area, but it was convenient for dealing with very regular callouts in the middle of the night from my work which was in the vicinity.)

I'm sure it wasn't you who decided (for brevity, of course) that the lender rate of 10% should not appear anywhere on the front page before the auction starts!

(Or increased the number of rooms from 88 to 85! )

edit: Ah! It doesn't on L-retail2 either. Maybe they only show when the auction starts for real.

It would be useful to have occupancy rate figures and the some idea of the refurbishment project plan so that an assessment as to whether or not the reduction in the number rooms whilst they under go refurbishment will have a significant effect on turnover and thus the ability to service the loan. 

Come_on_Grandad has also mentioned this on a PM.  Someone is working on it.

kermie: Where did the 65% number come from?  I can see there's a mention of 65% in the summary description, but that relates to the LTV after the refurbishment is complete and the valuation increases to £2.4M.  (£1.4M + £150k) / £2.4M = 65%)

The most important thing I note in the Valuation Report is the 29% markdown felt necessary to achieve a sale in six months - from £2.1M to £1.5M.  Based on that lower value, the LTV of the first charge would be 93%.  (Haven't AC used the six-month value as the basis for its LTV calculations in the past?)  This emphasises the difficulty in selling large properties with limited uses and a limited pool of buyers.  Even after the refurbishment increases the 'normal' valuation to £2.4M, if I assume a similar discount for a forced sale the sale price would be about £1.7M, which might mean there wouldn't be enough after the costs of forcing the sale and paying off the first charge (including any accrued interest) to cover the capital and interest owing on AC's second charge.

The valuation also makes it very clear how dependent the potential sale price is on the property being sold as a going concern.  If it isn't, it would seem that the first charge holder would have to take a significant loss, so the second charge holders wouldn't receive anything at all from a forced sale.  Considering the risks involved in a situation where the first charge has a reasonably high LTV, the 10% interest rate on the second charge seems rather low -- but that's JMHO.

So this one isn't for me, unless someone can convince me that my thinking is wrong.

pikestaff: The most important difference between this loan and C****** C****** Hotel (auction 36) is that the former is a second charge behind a 67% LTV first charge, and the latter is a first charge that started at less than 50% and is amortising (albeit very slowly).