Case Study: €11 Million Portuguese Hotel Bridge

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Transaction: €11 million bridging loan 

Asset: 138-key hotel 

Location: Lisbon, Portugal 

Borrower: Offshore investor 

Product: Bridging finance (Phase 1 of three-phase transaction) 

Status: Ongoing

Bridging Europe was instructed by an offshore investor to arrange fast acquisition finance for a 138-key distressed hotel asset in Lisbon. The property represented a significant opportunity in one of Europe's most active and internationally sought-after hospitality markets, but the distressed nature of the asset and the need to move quickly placed it well outside the appetite of conventional Portuguese lenders. Speed was not a preference. It was a condition of the transaction.

Distressed hotel acquisitions require a specific type of lender. The asset is not trading at full capacity, the income case is impaired, and the value is being acquired on a repositioning thesis rather than a stabilised yield basis. Most lenders assess hospitality assets on their current trading performance. The opportunity in a distressed acquisition lies precisely in the gap between current performance and stabilised potential, and capturing that gap requires a lender who understands hotel assets well enough to underwrite against future value rather than present income.

The borrower's offshore structure added a further layer of complexity. Portuguese domestic banks are cautious with non-resident borrowers at the best of times, and a distressed hospitality asset held through an offshore vehicle is well outside the parameters of what most domestic lenders will consider. The transaction required an international lender with genuine appetite for Portuguese hospitality assets, comfort with offshore holding structures, and the operational capability to move quickly.

Bridging Europe identified and approached the right lender within our Portuguese and pan-European hospitality network. We structured the credit presentation around the asset's repositioning potential, the strength of the Lisbon hotel market, and the credibility of the investor's refurbishment and operating plan. An €11 million bridging facility was arranged, allowing the client to complete the acquisition of the distressed asset on the required timeline.

This transaction is the first of three phases that Bridging Europe is advising on for this client. Phase 2, currently underway, involves refinancing the acquisition bridge onto a development finance facility to fund an extensive refurbishment programme that will reposition the hotel to upper upscale standard. Phase 3 will be a stabilising term loan arranged once the refurbishment is complete and the hotel is trading at its target occupancy and RevPAR levels, providing the long-term debt structure appropriate for a stabilised income-producing hospitality asset.

The full three-phase transaction illustrates the breadth of Bridging Europe's capability across the property and hospitality finance cycle, from opportunistic acquisition through development and into long-term investment finance, across one of Europe's most dynamic hotel markets.