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Case Study

Acquisition of Hotel Asset

About

Over $20M Investment Facility to assist with the acquisition and repositioning of an iconic Sydney Pub

Challenges

Navigating an asset purchase and repositioning can prove challenging, depending on the performance of the asset.

Our client was looking to purchase both the real estate and business interest of an iconic Sydney pub. The pub was underperforming its potential, which in turn impacted valuation.

We needed to convince the lender that although the key shareholders had no previous hospitality experience, they had developed a detailed plan and had recruited key personnel to reposition and improve the asset.

Furthermore, the change in ownership and repositioning is going to have a potential further impact on the business trading in the short-term. There was an expected additional capital investment needed to support the turnaround strategy.

Solution

Ocian helped secure a Stretch Senior Facility with an institutional non-bank lender.

Results

Once we had pitched the repositioned business strategy, the financier accepted the valuation advice based on both historic results and forecast trading.

The funding catered for the acquisition and initial capital improvements needed for the asset. This included no financial covenants in the first year, with cash flow covenants progressively increasing in subsequent years in line with forecast.

In our negotiation, we recognised that the client needed time to improve the standing of the asset. We were able to include the terms in the facility which provided the required time to reposition the asset and enable a future refinance.

As with our other deals, we are proud to be able to secure market-leading pricing and terms from a non-bank lender, further ensuring our client's ability to maximise value from their investment.

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