A European single family office owning a 92-key five-star resort hotel on the Côte d’Azur approached Hectocorn eleven months before its existing facility matured. The loan had been written in 2021 on five-year terms, and the family wanted to refinance early, fund a delayed renovation, and release equity for an unrelated acquisition.
The asset was valued at €113 million — around €1.23 million per key. It was profitable, well regarded and unencumbered by operational problems. It was also closed for four months of the year, which is the single fact that shapes every conversation about financing a Riviera resort.
Hectocorn arranged a €68 million senior refinancing at 60% loan-to-value with a pan-European real estate bank, priced at three-month EURIBOR plus 215 basis points over a seven-year term — an all-in cost of roughly 4.6%, materially below what the same asset would have cost to finance in sterling or dollars.
Client Requirement
The family office needed a refinancing that would:
- Repay the maturing 2021 facility ahead of a crowded refinancing window
- Fund a €9 million renovation programme deferred from 2024
- Release approximately €14 million of equity for a separate investment
- Set covenants that reflected a seasonal operating pattern rather than penalising it
- Run for at least seven years, removing refinancing risk from the family’s medium-term planning
The family also wanted to keep the existing operating structure untouched. The hotel is managed in-house by a team that has run it for two decades, and any lender requirement to bring in a third-party operator would have been a deal-breaker.
The Challenge: Seasonality, Timing and a Crowded Refinancing Window
Seasonal resorts are the hardest hotels to covenant. A property closed from November to March produces no revenue for a third of the year while still carrying debt service, and conventional quarterly interest cover tests fail mechanically in the closed quarters even when the asset is performing well on an annual basis. Lenders unfamiliar with resort operations often respond by demanding leverage low enough to make the transaction uneconomic.
Timing was the second issue. Industry observers expected the second half of 2026 to bring a wave of refinancings as five-year facilities originated in 2021 reached maturity, with early movers securing better terms before the volume peak compressed lender capacity. Approaching the market eleven months ahead of maturity was a deliberate choice, not an accident of scheduling.
The market conditions themselves were favourable. Three-month EURIBOR stood at 2.488% on 24 July 2026, having risen only modestly from 2.029% at the start of the year, and eurozone inflation had eased to around 2%. HVS put euro-denominated senior hotel facilities at 55–65% loan-to-value with margins of E+165–350bps and tenors of 5–7 years for stabilised assets, noting that resorts remained a core focus for hotel-specific lenders.
French regional trading supported the case. Provence-Alpes-Côte d’Azur RevPAR was up 1.85% as at May 2026, and the French upscale segment — the relevant comparison — posted RevPAR growth of 3.43% to €253.99, on occupancy of 76.36% and an average rate of €332.62. Sixty per cent of European hotel investors were reported to be targeting luxury and upper-upscale assets, which supports valuation for exactly this kind of property.
Precedent for cross-border euro hotel lending was strong: Aareal Bank completed a €567 million facility refinancing seven hotels across four European countries for Archer Hotel Capital, including three Paris assets, and a €405.6 million financing for thirteen Pandox hotels across eight European cities in March 2026.
Outcome
Hectocorn secured a €68 million senior refinancing. The agreed structure comprised:
- €59,000,000 senior term loan and a €9,000,000 committed capital expenditure tranche
- 60% loan-to-value against a €113 million valuation
- 3-month EURIBOR + 215 bps — approximately 4.6% all-in at close, against a EURIBOR reference of 2.488%
- Seven-year term with 1.5% per annum amortisation from year two
- Interest cover tested on trailing twelve-month EBITDA rather than quarter-by-quarter, removing the seasonal distortion
- A seasonal cash trap building a debt service reserve from summer trading to cover the closed months
- Approximately €14 million of equity released at close
- No requirement to appoint a third-party operator; the in-house management team retained
- Interest rate cap purchased at close on 75% of the drawn balance
The facility completed 16 weeks from instruction, roughly seven months before the existing loan matured.
Hectocorn Engagement
The seasonality question determined the shape of the entire transaction. Our work covered:
- Rebuilding the covenant package around trailing twelve-month performance, with a seasonally funded debt service reserve, so the structure matched how the business actually generates cash
- Presenting eight years of monthly trading data to demonstrate that the seasonal pattern was stable and predictable rather than a source of volatility
- Documenting the in-house management team’s track record in the form a credit committee could assess — tenure, performance history, succession planning and key-person cover
- Structuring the capital expenditure tranche as committed rather than uncommitted, so the renovation could not be blocked by a subsequent change in lender appetite
- Targeting lenders with genuine European resort experience rather than generalist commercial property banks, on the basis that seasonality is only a problem for lenders who have not seen it before
- Coordinating the Luxembourg holding structure with French security requirements, and modelling the equity release against French tax treatment with the client’s advisers
- Timing the approach to precede the expected H2 2026 refinancing wave
Five lenders were approached and three issued terms. The winning bank was not the cheapest on headline margin but offered the seven-year tenor and the trailing-twelve-month covenant construction, which the family valued more highly than 15 basis points.
Impact
The refinancing delivered:
- Refinancing risk removed until 2033, ahead of a crowded market window
- A €9 million renovation funded and committed, protecting the asset’s five-star positioning
- €14 million of equity released without selling an asset the family intends to hold generationally
- A covenant structure that reflects seasonal trading instead of fighting it
- Operational continuity, with the management team that built the business still running it
- Debt cost of roughly 4.6% — around 200 basis points below the equivalent sterling facility and 350 basis points below the dollar equivalent
The cost differential is worth dwelling on. At current benchmark levels, euro-denominated hotel debt is materially cheaper than sterling or dollar debt. For investors with euro income streams or a natural euro hedge, that gap is one of the more significant structural features of the 2026 market — and one that will not necessarily persist.
Key Deal Highlights
Facility type: Senior refinancing with committed capex tranche
Facility amount: €68,000,000 (€59m term + €9m capex)
Valuation: €113,000,000
Loan-to-value: 60%
keys: 92
Value per key: c. €1,230,000
Margin: 3-month EURIBOR + 215 bps
Reference rate at close: 3M EURIBOR 2.488% (24 July 2026)
Indicative all-in cost: c. 4.6%
Term: 7 years
Amortisation: 1.5% p.a. from year two
ICR covenant: Trailing twelve-month EBITDA basis
Equity released: c. €14,000,000
Hedging: Interest rate cap on 75% of drawn balance
For more on construction finance solutions for cross-border Hotels, get in touch with Hectocorn.
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Frequently Asked Questions
Yes, but the covenant package has to be built for it. The failure point is a quarterly interest cover test, which a hotel closed from November to March will breach mechanically regardless of how well it trades in season. The solution is testing cover on a trailing twelve-month basis and funding a debt service reserve from peak-season cash flow. Lenders with genuine European resort experience propose this structure themselves; generalist commercial property lenders often do not, which is why lender selection matters more here than on a year-round urban asset.
Euro debt is currently the cheapest of the three by a wide margin. Three-month EURIBOR was 2.488% on 24 July 2026, against SONIA at 3.73% and SOFR at 3.64%. With euro hotel margins running roughly 165 to 350 basis points, all-in euro costs of 4.5–5.5% are achievable on quality stabilised assets — compared with 6.5–7.0% in sterling and 7–9% for US floating-rate hospitality debt. If your income is in euros the arbitrage is real. If it is not, the currency risk needs to be modelled carefully before the pricing advantage is treated as a saving.
Nine to twelve months before maturity. That gives time to run a competitive process, complete valuation and legal work without deadline pressure, and walk away from terms you do not like. It also matters more than usual right now: the second half of 2026 was expected to bring a concentrated wave of refinancings as 2021-vintage five-year facilities matured, and borrowers who move before the peak generally see better terms and more lender attention than those competing for capacity at the same moment as everyone else.
Often, though it is one of the areas where lender type matters most. Banks are frequently resistant to funding recapitalisations, particularly where the equity is leaving the asset entirely. Private credit lenders are considerably more accommodating and are the most active part of the market for this kind of transaction, though pricing is higher. The determining factors are the resulting loan-to-value, the strength and consistency of trading, and whether the release is funding something the lender can see as constructive rather than simply extracting cash.
Not necessarily. Brand affiliation helps with lender comfort because it brings distribution and standardised reporting, but a long-established in-house team with a documented performance record can be equally acceptable — particularly on distinctive resort assets where the brand would add little. What lenders need is evidence: tenure, historic performance through a full cycle, succession planning and key-person cover, presented in a form a credit committee can assess. Independent operators are frequently attractive to specialist lenders who value unique positioning and premium yields.
It is entirely standard and does not obstruct financing, but it needs early coordination. French real estate security has its own formalities, and the interaction between a Luxembourg holdco, a French propco and the lender’s security package has to be mapped before documentation starts. Interest withholding, French thin-capitalisation rules and the treatment of any equity release all need input from French tax counsel. EEA-authorised lenders can lend into France on a cross-border basis under the EU passporting regime, subject to ACPR notification, which widens the lender universe considerably.
IMPORTANT: The case studies featured on our website are based on genuine client enquiries and transactions handled by Hectocorn. All personal and identifying details have been anonymised to protect the privacy and confidentiality of those involved.
Case studies are published for illustrative and marketing purposes only, to provide context around the types of financing we arrange and the outcomes we achieve for our clients. In some instances, a case study may draw on elements from more than one transaction to better illustrate a particular scenario.
Please be aware that not every enquiry we receive results in a completed transaction. Where a case study is based on an enquiry rather than a concluded piece of business, this does not represent a completed deal. The publication of any case study on this website should not be interpreted as confirmation that the underlying transaction was finalised.