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Report & Valuation Metro Bank November 2016 Report & Valuation Best Western Plus Epping Forest, 30 Oak Hill, Walthamstow, IG8 9NY savills.co.uk 30 November 2016 Giles Furze E: [email protected] Ref: WEHT370445/GF DL: +44 (0) 20 7409 8138 33 Margaret Street Metro Bank London One Southampton Row W1G 0JD London T: +44 (0) 20 7499 8644 WC1B 5HA savills.com For the attention of Antony Slavin, Lending & Securities Dear Sirs, BORROWER: Openview Properties Limited PROPERTY: 30 Oak Hill, Walthamstow, London, IG8 9NY In accordance with the instructions contained in your letter to us dated 10 November 2016, as confirmed in our letter to you dated 17 November 2016, we have inspected the property and made such enquiries as are sufficient to provide you with our opinion of value on the bases stated below. Copies of your instruction letter and of our letter of confirmation are enclosed at Appendix 1. We draw your attention to our accompanying Report together with the General Assumptions and Conditions upon which our Valuation has been prepared, details of which are provided at the rear of our report. We trust that our report meets your requirements, however should you have any queries, please do not hesitate to contact us. Yours faithfully For and on behalf of Savills (UK) Limited Giles Furze MRICS Tim Stoyle MRICS RICS Registered Valuer RICS Registered Valuer Director Director Offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East. Savills (UK) Limited. Chartered Surveyors. A subsidiary of Savills plc. Registered in England No. 2605138. Registered office: 33 Margaret Street, London, W1G 0JD Report & Valuation Best Western Plus Epping Forest, 30 Oak Hill, Walthamstow, IG8 9NY Contents Executive Summary 1 1. Instructions and Terms of Reference 5 1.1. Instructions ........................................................................................................................................................... 6 1.2. Background .......................................................................................................................................................... 8 2. The Property, Statutory & Legal Aspects 9 2.1. Location .............................................................................................................................................................. 10 2.2. Situation .............................................................................................................................................................. 11 2.3. Description .......................................................................................................................................................... 11 2.4. Accommodation .................................................................................................................................................. 14 2.5. Condition ............................................................................................................................................................ 17 2.6. Environmental Considerations ............................................................................................................................ 19 2.7. Town Planning .................................................................................................................................................... 20 2.8. Taxation .............................................................................................................................................................. 21 2.9. Tenure ................................................................................................................................................................ 21 2.10. Occupational Agreements .................................................................................................................................. 22 2.11. Summary of the Business ................................................................................................................................... 25 3. Market Commentary 28 3.1. Macro Economic And Hotel Market Overview .................................................................................................... 29 3.1. Overview of UK Hotel Market ............................................................................................................................. 29 3.2. London Hotel Market .......................................................................................................................................... 35 3.3. Hotel Competition ............................................................................................................................................... 39 3.4. New Supply ........................................................................................................................................................ 40 3.5. Comparable Transactions ................................................................................................................................... 40 3.6. Development Potential ........................................................................................................................................ 42 4. Valuation Advice 43 4.1. Principal Valuation Considerations ..................................................................................................................... 44 4.2. Approach To Valuations ..................................................................................................................................... 45 4.3. Valuations ........................................................................................................................................................... 47 4.4. Indication Of Reinstatement Cost ....................................................................................................................... 48 5. Loan Security 49 5.1. Suitability As Loan Security ................................................................................................................................ 50 6. General Assumptions & Conditions to Valuations 51 6.1. General Assumptions and Conditions ................................................................................................................. 52 Appendices 54 Metro Bank CRM Ref: COML100103063 November 2016 0 Report & Valuation Best Western Plus Epping Forest, 30 Oak Hill, Walthamstow, IG8 9NY Executive Summary Metro Bank CRM Ref: COML100103063 November 2016 1 Report & Valuation Best Western Plus Epping Forest, 30 Oak Hill, Walthamstow, IG8 9NY Executive Summary Metro Bank CRM Ref: COML100103063 November 2016 2 Report & Valuation Best Western Plus Epping Forest, 30 Oak Hill, Walthamstow, IG8 9NY Background and Proposal The previous owner of the hotel encountered financial structuring problems and was forced to sell a number of hotels last year. The Best Western Epping Forest was formally brought to market in Q4 2015 by Christie + Co on behalf of Bank of Ireland and Administrators. The Borrower, Overview Properties Limited, managed to purchase the hotel direct from the previous owner and circumvent the formal sales process by Christie + Co. The Borrower has engaged a third party operator (Starboard Hotels Ltd) to manage the hotel. Our valuations are required for loan security purposes in connection with a proposed facility to be granted to the Borrower. Property Overview The Best Western Epping Forest was constructed in the 1970s and later extended in the 1980s. The hotel underwent a substantial refurbishment programme in 2014 and rebranded at that time (from the County Hotel in Woodford) to the Best Western Plus Epping Forest. The property comprises a 99 guest bedroom hotel located on a 1.7 acre freehold site on the edge of Epping Forest. The hotel facilities include a restaurant, bar, 4 conference rooms and car park. Tenure Freehold. The hotel will be operated by SBH Hospitality Ltd under a 5 year Management Agreement dated 15 August 2016. Trading Performance 2013 2014 2015 2016F* 2017F 2018F 2019F Occ % 77.5% 74.6% 70.7% 64.5% 69.1% 71.1% 74.0% ARR (£) £44.06 £45.81 £54.36 £59.54 £57.48 £58.98 £60.48 RevPAR (£) £34.12 £34.17 £38.43 £38.42 £39.69 £41.95 £44.73 Total Revenue (£000's) £1,804 £1,579 £2,116 £660 £2,107 £2,222 £2,358 GOI (£000's) £988 £725 £1,077 £353 £1,192 £1,290 £1,405 GOP (£000's) £557 £237 £541 £202 £773 £862 £966 EBITDA (£000's) £414 £85 £358 £176 £688 £776 £878 EBITDA (% of Revenue) 22.9% 5.4% 16.9% 26.7% 32.7% 34.9% 37.2% * 4 month forecast Source: Starboard Hotels Ltd (forecast) 2014 & 2015 actual figures have been adjusted to exclude “Other Non Operating Expenses”. The forecast figures included in the table above (from 2016), prepared by Starboard Hotels, do not include management fees, nor do they include a FF&E reserve. Principal Valuation Considerations Freehold interest Purpose built hotel dating back to 1970s Midscale hotel brand On site complimentary car parking for approximately 70 cars Function rooms suitable for a variety of events and conference business Relatively secluded location on the outskirts of London Reasonable communication links to Central London Metro Bank CRM Ref: COML100103063 November 2016 3 Report & Valuation Best Western Plus Epping Forest, 30 Oak Hill, Walthamstow, IG8 9NY Public areas and guest bedrooms finished to a good standard following refurbishment programme in 2014 Function rooms adaptable for a variety of events and conference business Capital investment required to refresh conference & events
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