Maslow Capital launches dedicated lending service for hotel developers
Maslow Capital, the specialist provider of real estate development finance, today announces the launch of its lending service for the hotel sector. This is Maslow’s latest sector expansion, adding to the dedicated lending divisions that were formed for both Purpose-Built Student Accommodation (“PBSA”) and industrial assets in 2017 and 2018 respectively.
Maslow Capital’s new hotel development funding is the latest step in its plans to expand into new markets and diversify its existing portfolio. The firm intends to deliver bespoke lending facilities for developers of hotels across the UK, in areas that demonstrate favourable demand and supply imbalances.
A collection of contributing factors have influenced the revitalisation of the UK tourist economy, with the devaluation of sterling following the EU referendum particularly impacting trading performance. This has resulted in the UK now being comparatively cheaper for overseas visitors and conversely foreign holidays more expensive for UK citizens. As a result, occupancy and hotel average daily rates in London and key regional cities have now reached levels that support new ground-up development. Furthermore, the hotel market’s improved trading performance has also been matched with increased investor appetite, improving the overall liquidity of the product.
Maslow’s move into this sector aims to support developers with its unconstrained balance sheet whilst using its knowledge of the development process to structure and deliver lending solutions that meet project specific requirements.
Like all of Maslow’s approach to underwriting, Maslow will look to back experienced developers with good track records who are delivering well-located schemes in cities where there is a significant undersupply of beds, with strong local economic fundamentals underpinning their business plans.
Commenting, Ellis Sher, CEO and Co-Founder of Maslow Capital, said:
“Notwithstanding the pipeline of circa 18,000 bedrooms coming to the market in 2020, we have identified areas of the UK where the stock is tired and or where the occupancy rates suggest that demand is exceeding supply. Our research also indicates an increase in international visitors which is set to increase by circa 13% to 44 million by 2030. Given this macro trend along with our appetite to back income producing assets we are looking to allocate significant capital to this sector.”
Maslow has released its hotel development product criteria which are as follows:
Asset type: Hotels, Aparthotels, Serviced Apartments
Location: City Centre with easy access to good transport links as well as destination led hotels
Keys: Ideally 100 +
Hotel type: 2-4 star branded hotels (i.e. Holiday Inn, Moxy, Hampton, DoubleTree, Holiday Inn Express, Hilton)
Revenue mix: Majority of income derived from bedroom revenue with minimal dependency on F&B and other leisure facilities
Operating models: Owner Operated or Operated by Management companies (Management agreements of maximum term 3-5 years) or direct leases to operating tenants. No long-term management agreements.
Geography: England and Scotland
Experience: Demonstratable operator experience is a key underwriting requirement
Freehold: We only lend against the freehold or long dated leaseholds with non-onerous ground rent obligations
Stabilisation period: 1-year post achievement of PC
Leverage: Up to 65% LTV/GDV