Valuation & Advice – Southwest Hotel
Acting on behalf of : Joint Liquidators, c/o BDO LLP
Description:
A 44 bedroom hotel and wedding venue, located in Yelverton, Devon.
The Hotel had been acquired in 2011 and expected to make a loss in the first couple of years. During this time the owners spent a substantial amount renovating what had been the tired former hotel, changing the name and hugely raising the quality of the ballroom, restaurant and en-suite bedrooms. While the initial losses diminished annually, the Hotel remained in deficit every year and was put on sale in 2019. It had been hoped to sell the business as a going concern, with the original asking price close to £2million. The hotel business was hit by the first coronavirus lockdown, and received no income between March and August 2020, with all staff on furlough.
Valuation basis:
Market value of the freehold interest with vacant possession; assuming a restricted marketing period.
Valuation purpose:
To advise the proposed Liquidator in respect of a pre-liquidation offer received for the property and assets.
PACT was asked to consider whether this offer should be accepted by the Liquidator or whether another course of action would produce a better return for creditors.
Considerations:
• As a result of the Pandemic market conditions were uncertain, with little transactional activity that might reflect the current market conditions.
• There was a lack of trading information available to assess the trading potential of the property.
• The property showed signs of deterioration, exacerbated by the extended closure with substantial funds needed to return the hotel to profitability.
• The offer received had been made from a party looking to change the use of the building to a care home; information about the extent and nature of the proposed changes was limited. While no detailed proposal for the conversion of the building to a care home had been made available, we considered whether this was likely to be a viable proposition considering the location and rambling nature of the buildings.
Conclusions:
Having completed our research and considered all relevant factors including Covid uncertainty, the deteriorating condition of the buildings, a lack of trading information, and high holding costs we advised – supported by evidence of comparable sales – that the offer received was likely to produce the highest return for creditors.
We considered the possibility of applying for a change of use and re-marketing concluding that any benefit was likely to have been outweighed by the holding costs.
Moving forward with confidence:
Shortly after we presented our report, the Liquidator was able to negotiate a sale of the property to NYMS Services Ltd at a price in excess of the guide price.
NYMS Services Ltd is a care company, based in London, which provides care for people with dementia, mental health conditions and substance misuse problems. The company, incorporated in 2018, also owns the Pennine Care Centre in Glossop, Derbyshire. Full planning application for change of use from a hotel to a care home was granted in April 2021.
Valuations were undertaken by:
Chris Price, MRICS and Liz Crawford MRICS
If you require a valuation of a hotel, a carehome or other commercial premises then contact us today
(T): 0117 456 8775
(E): chris.price@pactproperty.co.uk
Update October 2022
Lead Director: Chris Price MRICS NARA
Chris is an RICS Registered Property Valuer & LPA
Receiver, with 30 years experience in the corporate
recovery / asset debt recovery sector