MEZZANINE FINANCING
Realia Family Office, in collaboration with its partners, offers its clients the opportunity to participate in mezzanine financing projects for premium residential and hotel real estate in London. This instrument ensures a secure return on invested capital for the investor, along with high yields generated through the developer’s equity. As an investor, you provide financial credit alongside a bank to the developer.
In the event of an unsuccessful project completion, the investor fully reimburses the invested funds, which are secured by the developer’s assets and capital, standing in line just after the bank, which has also provided credit. A significant advantage in this situation is the developer’s approval by the credit committee, effectively guaranteeing their creditworthiness.
- Investment volume in these projects starts from £500,000.
- The cost of properties in these projects ranges from £5 million to £15 million.
One of our partner’s completed projects:
HILTON GARDEN INN, SILVERSTONE
- Property: Hilton Garden Inn (construction completion date – September 2022)
- Hotel features: 197 rooms, café, restaurant, bar, terrace, private dining room, rooftop terrace. 68 rooms have balconies and offer sea and racetrack views, making this asset unique.
- Location: Silverstone, the property is situated near the start/finish line of the renowned Silverstone race track, where Formula 1 races take place. The British Grand Prix attracts over 350,000 visitors annually.
- Land and hotel construction cost: £53.2 million.
- Mezzanine loan: £12.12 million, along with a primary loan of £35 million provided by the Merseyside Pension Fund, making up an 80.0% Loan-to-Value (LTV) ratio based on a December 2022 JLL assessment.
- Loan purpose: partial refinancing of existing construction debt and asset stabilization.
- Additional collateral will be provided in the form of a guarantee.
Location:
- Silverstone Circuit remains the hub of “Motorsport Valley,” hosting 7 out of 10 Formula 1 teams. An Aston Martin Formula 1 factory costing £500 million is being constructed adjacent to the circuit. The circuit attracts over 1 million visitors annually for motorsport and other events combined.
Hotel:
- The hotel features 68 rooms with balconies and a rooftop terrace offering a direct view of the Silverstone Circuit (start/finish line and pit lanes). This design allows conversion into hotel apartments for race events. JLL’s valuation (December 2022) is £58.9 million.
Demand Factors:
- The hotel’s location attracts motorsport enthusiasts worldwide, who come for events such as the Formula 1 Grand Prix, MotoGP, Silverstone Classic, and others (see below). These events draw a significant number of people. This area sees 764,500 visitors annually.
Additional Opportunities:
- Expanding the hotel’s offerings by adding 90 rooms on adjacent land at a cost of £9,000 per key, increasing the total number of keys from the current 197 to 287.