INVESTMENT DETAILS
Unlocking Value Through Strategic Investment
Transforming Distressed Assets into High-Value Properties
Introduction
At Paymán Investments, our strategic focus on acquiring undervalued assets and enhancing their value through targeted investments has demonstrated significant success. Our current portfolio showcases impressive growth, and we are on track to further amplify this trajectory. To provide context for our projected valuation of £120 million, we present a comprehensive overview of our asset growth, strategic acquisitions, robust growth projections, cutting-edge technology, and market positioning, alongside industry comparables.
Paymán Investments
Product Type: Real Estate
Development Type:
Refurbishments & Expansion
Current Portfolio: 10+
Years in Business: 4
Fundraise: £20m
Team
The Offering
We are ideally seeking an investment of £20m on an equity basis. Other options we are open to would include an equity participation of £10m and a debt buy-out of our current £10m in borrowing at 2.5-3% over base depending on LTV sought, or debt financing on individual renovation projects.
The Investment
Total capital raise: £20m
£10m would go towards paying off existing debt. This would retain earnings within the business and reduce the overall risk. While we are seeking to get a commitment on £20m for now, we are ideally looking for a capital partner who would be able to support ongoing growth through a credit line besides the current injenction of capital. The unencumbered assets could then be provided as security to support further borrowing as and when required to support the projects outlined below.
Hiring & Marketing (£1m)
Funds for this would start being deployed immediately for team building, sales and marketing efforts. Senior hires would take place by Dec 2024, and we would seek to ramp up operations over the course of 2025. We would seek to hire a Head of Development, a UK-based Financial Director and a Chief HR Officer, alongside building a larger sales team and investing in marketing and advertising.
Renovate Current Assets (£10m)
Given the listed status and historic importance of Royal Hotel Kettering and Stromness Hotel, grant funding may be available to cover part of the renovation costs. However, this would not be clear until further down the line, so we have not assumed any contribution from those for the time being.
Renovate Current Assets (£10m)
Maycliffe Hotel, Torquay, Devon
Total capital raise: £20m
The conversion of Maycliffe Hotel into a 30-unit aparthotel is ready to hit the ground, with a build team in place and all paperwork lined up. The hotel market in Torquay showed great promise when we first acquired this asset, however over time supply has increased, and the quality of our current offering is in adequate. Conversion to an aparthotel would vastly increase the quality of our offering, and move us out of the red ocean into the blue ocean, offering highly-sought self-catering units year around.
Royal Hotel Kettering, Kettering, Northamptonshire
Cost: £4m, Timeline: Jan 2025 - Aug 2026, End Product: Luxury 42-bedroom hotel, wedding vennue and conference centre
The renovation works at Royal Hotel Kettering, aim to turn it into a regional hub for weddings and conferences. Its strategic location in the heart of England, as well as its local interest, being located right on Market Place make it a property of great potential. Plans are currently being drawn up at full-speed following a complete strip-back of the property over the summer. A number of disused areas of the hotel would be brought back into use, ultimately offering 42 luxury bedrooms, a Gala Hall, restaurant, bistro café, lounge bar, spa, beauty centre, hotdesking space, two conference rooms, and a large disco in the basement to complement the wedding business.
The offering could be further extended by demolishing and constructing at the rear of the hotel, which is presented as an option further down alongside acquisition of neighbouring land.
The Stromness Hotel, Stromness, Orkney
Cost: £3m, Timeline: Oct 2025 - Apr 2026, End Product: Luxury 60-bedroom hotel/apart-hotel and large town-centre restaurant
The Stromness Hotel has proven to have extremely high potential, as even in the state we purchased it in, where the room quality is not of a high standard, trading has been highly profitable. Besides a full renovation of the current stock, the proposed works would see the restaurant and reception being moved down to the disused ground-floor, and the first floor being converted into an additional 18 rooms. We would also seek to add kitchenettes to some of the units to enable profitable trading in the low season by attracting longer-term guests and reducing staffing costs.
Buffer & Minor works at other properties
Cost: £1m, Timeline: Oct 2024 - Oct 2025
We would be looking to continue improvements across the rest of our properties to help improve our offering and drive positive reviews.
At Minstrel Court we would look to build a new toilet block for events at Minstrel Court, develop a Secret Garden, and rebuild one of the existing lodges into a luxury honeymoon suite. This would allow us to host larger weddings (or two weddings in parallel) and add two USPs to drive more weddings.
Proven Asset Growth
Strategic Asset Appreciation
Our portfolio showcases significant asset growth, driven by strategic acquisitions and value-add renovations. For instance, The Grand Hotel was acquired for £365,000 and is currently valued at £500,000, with a projected value of £2,500,000 in three years—representing a 585% projected increase.
Portfolio-Wide Growth
This growth trajectory is consistent across our portfolio, with properties like Minstrel Court purchased for £1,550,000 and expected to reach £8,000,000 in three years, a 416% increase. These figures validate our ability to unlock value through targeted investments and strategic enhancements. Another example is The Stromness Hotel, purchased for £330,000, is projected to be valued at £4,700,000 in three years—a 1,324% increase, underscoring the substantial upside potential of our approach.
Strategic Acquisitions
We would seek to deploy £6m of funds to acquire hotels and land at two of our most promising existing locations over the next 12 months, which would cost around £2m. We would seek to acquire a distressed asset for circa £1m (to be identified and negotiated once we are in funds), and the balance of £3m to renovate or convert some of the acquired assets.
A further £3m would be used to acquire one or two other assets, to be identified down there line.
Below Market Value Purchases
We have a track record of acquiring properties at substantial discounts. For instance, Lovelady Shield Cottages were purchased for £740,000 and are currently valued at £2,125,000, with a projected value of £6,000,000 in three years—a 711% increase.
Value Creation through Renovation
Our strategy involves targeted renovations and operational improvements that substantially enhance property values, enabling us to capture significant future gains.
Stromness
Stromness has three main hotels. Our trading at The Stromness Hotel has shown huge potential, and so we would be interested in acquiring the other two hotels in town. They are owned by the same couple and have been for sale in Stromness for some time. Guide prices have been provided below, however these would be negotiated on at the time of putting an offer forward. Between them, the hotels offer 22 en-suite bedrooms with a further six en-suite rooms in the Harbourside House annex, which is currently leased.
The Ferry Inn
Guide Price: £750,000
The Royal Hotel (Stromness)
Guide Price: £550,000
Kettering
We would be seeking to obtain planning permission for a development on land already owned by us, alongside the land being sold as part of Westbury, and landlocked land owned by HSBC which is accessible through Westbury. The exact nature of the build would have to be decided following further assessments, however initial discussions with the council have indicated that they may be interested in long-leasing a custom-built accommodation block. Other options would include co-living quarters or an apart-hotel.
Westbury
Guide Price: £850,000
The property comprises two adjoining buildings known as Westbury and land at the rear of Royal Hotel Kettering. Previous planning permission has been provided for conversion of the houses to 6 residential units, and the construction of 4 additional units on the adjacent land.
Land-locked land
HSBC owns some land behind Westbury, which they are open to selling off-market, and we are currently in negotiations to find out what the lowest offer is that they would accept. We believe we would be able to obtain this for a bargain, and through acquiring Westbury, be able to release its true value. The land could potentially become part of the development, or be turned into outdoor gardens to increase the marketability of the wedding venue at the Royal Hotel.
Robust Growth and Profitability Projections
We anticipate a 25% year-on-year growth across our portfolio over the next two years.
This projection is based on our historical performance and ongoing property enhancements.
Our immediate goal is achieving profitability across all properties. This will be achieved through ongoing value-add renovations and a host of other initiatives focused on on-site team building, marketing initiatives and enhanced guest experience through the introduction of innovative tech. By the second year, we expect profitability and a consistent yield of 10% return on property values, coupled with asset appreciation driven by acquisitions and refurbishments.
Cutting-Edge Technology and Efficient Operations
Tech-Driven Efficiency
Through Zeevou and GuestGuru, we leverage advanced technology to streamline operations, ensuring high profitability and scalability. Our tech-driven approach and operational efficiencies provide a significant edge over traditionally run hotels, enabling us to capitalize on distressed assets and transform them into profitable ventures.
Untapped Potential in Distressed Assets
We specialize in acquiring and revitalizing distressed hotels and bed & breakfasts. For example, The Stromness Hotel, purchased for £330,000, is projected to be valued at £4,700,000 in three years—a 1,324% increase. The Stromness Hotel is only one example of many under-invested hotels across the UK run in traditional ways which do not respond to the modern traveller’s needs and expectations, and thus are missing out on achieving the potential that the market provides for. Inflation and the associated increase in costs and interest rates will be bringing more similar opportunities to the market over the next 24 months.
Comparable Properties
Country House Hotels
Boutique Hotels
Aparthotel Conversions
Country House Hotels
Luxury Country House Hotels transact at figures up to £250,000 per room, similar to Northop Hall Hotel and Lovelady Shield Hotel, which could achieve much higher valuations once successful trading has been built up.
Boutique Hotels
Premier Inn, UK, valued at £100,000 – £150,000 per room, relevant to The Knighton Hotel, which could be repositioned to command higher rates.
Aparthotel Conversions
Staycity Aparthotels, valued at £150,000 – £300,000 per room, relevant to Irvine River Guesthouse, The Grand Hotel and Maycliffe Hotel for potential conversion.
Exceptional Asset Growth
– Current Asset Valuation: Our portfolio is currently valued at approximately £19,560,000, based on market assessments and recent purchases.
– Projected Asset Valuation: In three years, the total projected valuation of our assets is £41,450,000, reflecting our growth strategy and value enhancement plan. The below growth in current asset value.
When averaged out with an assumed growth of 50% on new acquisitions, yields an annual growth of 25% as assumed in our projections. Our track record to date has been 67.98% asset growth in the first 3 years after acquisition, however we are using a more cautious approach in our future growth projections
Valuation Methodology
Projected Income: With a 10% yield on £41,450,000, the anticipated annual income is £4,145,000.
Valuation Multiple: Applying industry standards, a multiple of 15x to 20x earnings is appropriate. For high-growth, tech-enabled businesses, a higher multiple is justifiable.
Using a 15x Multiple: £4,145,000 (income) x 15 = £62,175,000.
Additional Value from Operational Efficiency: Advanced technology and operational efficiencies can add 50% to 100% to the baseline valuation.
Additional Premium: £62,175,000 x 50% = £31,087,500.
Total Adjusted Valuation: £62,175,000 + £31,087,500 = £93,262,500.
– Strategic Positioning: Our technology-driven model and focus on distressed asset turnaround provide substantial value beyond traditional metrics.
– Market Conditions: Given strong growth prospects and performance metrics, applying a premium multiplier aligns with industry practices for high-growth, tech-enabled businesses.
– Investor Returns: The £120 million valuation reflects not only current asset value but also long-term income potential and market positioning advantages. Our Asset Growth of around £7 million over the last year, suggests a potential valuation in excess of £120 million:
£7,000,000 x 20 = £140,000,000
Projections for 5-years down the line indicate an annual growth in asset value of £33 million. By applying a similar calculation, this would provide a valuation of:
£33,000,000 x 20 = £660,000,000
This translates to an ROI of 4.7x in 5 years.
Ownership Structure
Each asset is owned by an SPV, which are in turn owned by Paymán Investments Limited, a company based in Jersey (UK). Equity investors would acquire a stake in Paymán Investments Limited. Over the last 3 years, the investments made under Paymán Investments Limited have had an average YoY Growth of 68%. We are hoping to hit break-even on an operational basis in the current financial year, and achieve an EBITDA of £750k by Jun 2026, increasing to £1.7m by Jun 2027, following disposal of several assets that we feel are not promising and undertaking the renovations outlined above. Further acquisitions should allow us to exceed these figures once they become operational.
Portfolio Value
The current brick & mortars value of the portfolio is around £20m. Certain hotels which have already achieved profitability could have significantly higher valuations that their brick & mortar valuations.
The investment we are seeking is not based on the value of assets under management, but rather on the track record of asset growth, which has added £7m in value over the last year (backed up by RICS valuations). Using a multiple of 20, that yields a valuation of £140m. Projections indicate that in 5 years’ time, our annual growth rate would be £33m, yielding a valuation of £660m, a 5.5x increase.
Exit Strategy
Na’ím regards this business as his long-term retirement plan, and would therefore not necessarily be looking for an exit on his part, but would be open to exiting in 5-10 years should a good opportunity arise. Ideally, he would be looking to buy back the shares being sold now down the line, subject to selling his investments in other start-ups.
Investment Terms
We are seeking to raise £20m and are open to considering equity participation, debt, or a mixture of the two. The funds would be split between refurbishment of existing properties and acquisition of new stock. As a data-driven company, we would be assessing performance of all properties on a continuous basis and only retaining the top performers, while selling the rest of the properties off to re-invest into new opportunities. We anticipate a YOY growth of 25% for the next 2 years, over which period we will be focusing on achieving profitability across all properties in the portfolio. Following this, we are forecasting that our annualised growth the growth in asset value will be complemented by a yield of around 10% of property value. We are ideally seeking an investor who would be happy to commit to at least 10 years, to allow us to build an interesting proposition for an exit to an investment fund.
– Fundraise: £20m
– Equity, Debt, or a
Combination of the two
– Expected Growth: 25% YOY
– Anticipated Net Yield:
10% per annum on asset value
Join Us in Transforming Underperforming Properties into High-Value Assets
We are seeking to raise £20 million to accelerate our growth and expand our portfolio of high-potential properties. With your investment, we will acquire and refurbish underperforming properties, leveraging our proven strategy and innovative technology to maximize their value and profitability. This capital infusion will enable us to scale our operations, enhance our market presence, and continue delivering impressive returns. By partnering with Paymán Investments, you will be part of a transformative journey that not only revitalizes historic and sub-quality hotels but also capitalizes on emerging market opportunities. We invite you to join us in reshaping the future of property investment and management, driving both financial success and long-term value.
Invest with Us
If you’d like to go ahead with investing with us, we’d love to hear from you! Please use the form below to drop us a line, or contact Na’ím over WhatsApp on +44 7587 495 729.