We received instructions on behalf of our client, a mainstream bank, to provide an RICS ‘Red Book’ valuation report and opinion of market value of the hotel as an operational entity, having regard to its trading potential to include its freehold interest, inherent goodwill and plant & machinery.
A valuation for this purpose is typically referred to as a ‘loan security valuation’. These are undertaken for banks and lenders to establish whether the value of the loan requested can be secured against the value of the property.
Our client required an opinion of market value and commentary on the asset as security for the purpose of their loan considerations. There are a small number of hotels on the Isles of Scilly and, therefore, limited comparable evidence.
We provided an RICS ‘Red Book’ valuation report, which included detailed commentary on the hotel market, how the business is operated and how this compares with typical operations on this nature, together with our analysis of recent hotel transactions across Cornwall and Devon. Our report enabled the bank to understand the associated risks with asset, its location and market, to make an informed decision before agreeing to lend.
Having advised our client the property was suitable for secured lending purposes, in line with their lending policies for a property of this type, the borrower secured finance, enabling them to proceed with their future business plans.
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