FRP Real Estate Advisory secures £85m high street funding for South West hotel portfolio

Real Estate Advisory has completed an £85m finance package from a high street bank secured against a portfolio of three owner-operated hotels in the South West, supporting the borrower’s next phase of growth.

Background

The portfolio comprises three owner-operated hotels in the South West: one fully established and trading, and two recently refurbished sites now building occupancy. The client is a privately owned hotel group with a 20-year operating track record in the sector.

Action

Led by Director Cameron Hayes, the team ran a full process across the mezzanine and senior lending markets before concluding that a senior structure with an accordion mechanism delivered materially better value than the mezzanine financing originally sought.

Key features of the facility include:

• A £75m bilateral loan on a five-year commitment, refinancing the incumbent lender
• A further £10m committed accordion, to be released as the two refurbished hotels stabilise
• An interest-only structure with a bullet repayment at the end of the term
• Margin ratcheting 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
• FRP’s fourth completed transaction for this client

Outcome

The structure gives the client capital as value builds, rather than requiring it to be paid for upfront — supporting the group’s growth plans while reflecting a long-standing and deepening lending relationship.