Trading Business Mortgage Portsmouth

What is a sector-specialist commercial mortgage?

Trading-business mortgages fund operational commercial property where the value is bound up with the business that runs from it. Unlike pure investment property, where the test is rent against mortgage cost, trading-business mortgages test EBITDA cover: the trading profit of the business covering the mortgage repayment, typically at 1.5 to 2.0x cover. Goodwill, brand, sector regulation and going-concern value all influence the lend.

Underwriting is sector-specific and depends entirely on the property type. Hotels: occupancy, ADR (average daily rate), RevPAR, brand affiliation, location. The Gunwharf Quays leisure cluster (operated by Land Securities), the Osborne Road Southsea seafront hotel ring (sea-view boutique and mid-market stock), and the Spice Island and Old Portsmouth heritage hospitality stretch (Bath Square, The Point, Broad Street pubs and inns) are the three named hospitality sub-markets for the city, supported by year-round tourism flow through Spinnaker Tower, HMS Victory, the Mary Rose Museum, the Gunwharf outlet trade and the Southsea seafront calendar. Pubs and bars: barrelage, EBITDA, beer-tie status, license type, trading record. Care homes: CQC rating, occupancy, weighted-average bed value, fee rates (council versus private mix). The Cosham and Drayton care-home corridor along the A2030 (anchored by Queen Alexandra Hospital) is the deepest care vein in this network. Dental practices: NHS UDA contract value, private fee mix, principal versus associate structure, surgery count. Day nurseries: Ofsted rating, registered places, occupancy, fee structure. Wedding and banqueting venues: forward booking pipeline, average spend per event, accounts seasonality.

Loan-to-value runs 60 to 70% typically for Portsmouth trading-business cases, lower than pure investment because the asset value is sector-locked and harder to repurpose if the business fails. Heritage hospitality and listed-building stock in Old Portsmouth and on the Spice Island and Bath Square stretch can flex slightly lower (55 to 65%) where re-purpose options are constrained by listed-building consent. Term 15 to 25 years; interest rates 7.0 to 9.0% pa reflecting the specialist underwrite. Different sub-sectors route to different lenders, and getting the right desk first time is the broker's entire job. Most trading-business mortgages are taken out by a limited company trading entity with personal guarantee from the operating principal, and most fall outside FCA-regulated mortgage rules because they finance business premises, not residential property.

Stamp duty land tax on a trading-business purchase follows commercial rates (0% to £150K, 2% to £250K, 5% above), and where a deal is structured as a share purchase of an existing operating limited company rather than an asset purchase, SDLT can be deferred or partly avoided. We work alongside the buyer's tax adviser on the structure before submission. Refinancing an existing trading-business mortgage (typically off a maturing 5-year fix) is a frequent reason to re-engage; the current rate environment is creating refinancing demand particularly on Southsea seafront hotel and Cosham / Drayton care-home operator books. Indicative case seed: a 32-room Osborne Road Southsea seafront hotel, stable occupancy and ADR underpinned by year-round tourism and the Southsea events calendar, EBITDA cover comfortably above 1.7x, purchased at £4.8M with a £2.88M facility at 60% LTV around 7.5% pa via Cynergy Bank.

Operator profiles routing through this product

• Hotel operators across the Osborne Road Southsea seafront and the wider PO5 hotel ring
• Gunwharf Quays leisure operators with bar, restaurant and entertainment-venue trading floors under Land Securities head-leases
• Old Portsmouth and Spice Island heritage hospitality operators with listed-building pubs, inns and restaurants on Bath Square and Broad Street
• Licensed-trade operators across the city centre, Albert Road independent strip and the Commercial Road precinct
• Dental and primary-care principals (Cosham, Drayton, Farlington, North End) buying within the Queen Alexandra Hospital halo
• Care home operators across the Cosham and Drayton A2030 corridor and the wider Hampshire suburban ring
• Day nursery operators across Cosham, Drayton, North End and the Hayling Island fringe
• Heritage hospitality operators with year-round trading underpinned by Spinnaker Tower, HMS Victory and Mary Rose visitor flow

Trading-Business Mortgage FAQs