PME Hotellerie Est

Presentation of the company

PME HOTELLERIE EST is the company created in 2014 by 123IM to acquire the Kyriad Reims Est hotel – Exhibition Centre. The hotel, managed by HPVA Hotels, employs 10 people and is based in Reims.

The company acquired the 30-year-old hotel/restaurant Kyriad Reims Est – Parc des Expositions in 2015.

The Kyriad Reims Est – Parc des Expositions is located in the exhibition centre a few minutes by car from the centre of Reims.

The 3-star hotel is part of the Kyriad hotel franchise (Louvre Hotel group) and has 42 rooms and a restaurant open Monday to Friday between 12pm – 2pm and 7pm – 9pm.

A buffet breakfast is also served every morning between 7:00 am and 9:30 am. The hotel works with business and tourism customers, welcomes its guests 24 hours a day and also has 2 meeting rooms.

Since the takeover of the hotel, no significant repair work has been carried out. In July 2018, 123IM set up a new management team, led by the HPVA Hotels group, specialized in hotel management.

Project Description

The company requests a loan of 415 000 € over 72 months to finance renovation works. The works’ plan is of 532 000 € : renovation of facades, replacement of windows and air conditioning, insulation, electricity, replacement of furniture, bedding, the balance is financed by treasury. This project will be realised in the next few months. The hotel will not close, the works will be done as it goes along, alternating the immobilized rooms.

This project is a Flexible Bridge Loan, an amortizable loan with a standard commitment for the first 9 months and the possibility of early repayment at no cost for the remainder of the loan term, even in the event of refinancing by other financial institutions.

The amount offered on the platform is limited to 203350€, which is in line with the regulatory limits.

Like all projects presented to individual lenders on October, it is co-financed with institutional investors, sophisticated investors, and the management of October, subscribers to the October Fund.

Analyst’s Opinion

With a turnover of 817 000 € in 2018 and an experienced team, the company has a good visibility and location in its city.

The variation of the revenue and the negative profitability are linked to the lack of works in the hotel so a decrease of the attendance. The forecast is based on the future performance, taking into account the new management.

The borrower has a correct repayment capacity with a forecast FCCR (Fixed Charge Cover Ratio *) at 1,15 and an excellent financial structure, with a forecast net debt / ebitda ratio of 1,2 and a net debt / shareholder equity of 13%.

The analysis of the project leads to a credit rating of C and a 9,00% annual interest rate.

Warning: Today, PME HOTELLERIE EST is mainly controlled by investment funds of the 123IM group, which Olivier Goy (founder and chairman of Lendix’s management board) created and managed until 2014. Olivier Goy is however no longer operational in 123IM and has no impact on fund management. In addition, we recall that Lendix executives (including Olivier Goy) invest systematically and significantly in all projects presented on Lendix in order to align their interests with those of lenders.

“*The multiple of FCCR at 1,16 means that the company has a safety margin of 16% relative to its ability to repay its credit maturities.

The expert opinion is given as an indication on the basis of the elements provided by the project holder and information from our databases (Scores & Decisions, Corporate Banking File). This opinion is only an element of reflection in the decision making of a lender to participate in the financing of a project.”

Strong points:

-Good historical performance based on diversified client base.

-Correct repayment ability with a forecasted FCCR of 1,15 reinforced by the support of shareholders.

-3 stars hotel near of Reims’ park of exposition and center, with a good visibility, good notation and is part of the Kyriad franchise.

Points of caution:

-Competitive sector