Financing for income-producing assets

Investment loan for income-producing real estate assets

Medium- and long-term financing for completed, operating or stabilised assets that generate recurring cash flows: hotels, residential for rent, serviced apartments and other income-producing assets.

Analyze your project

We assess every deal case by case

Assets financed: Income-producing
Term: Medium and long
Leverage versus banks: Higher
Amount: From 7 M€

What is an investment loan

A medium-term financing solution secured on income-producing assets: the loan is sized on the value of the asset and the income it generates, not on works still to be carried out.

Income-producing asset

Hotels, residential for rent, student/senior housing and flex living that are already operating or becoming stabilised.

Single disbursement

Capital is provided at closing to buy, refinance or reposition the asset.

Exit by refinancing

Repaid through the sale of the asset or bank financing once income has stabilised.

Also known as an investment loan facility or income-producing asset financing. The term investment loan is not translated.

How an investment loan works

Five stages, from the income-producing asset through to refinancing or sale.

Asset

A property that is operating or being stabilised, with income or a defined operating plan.

Structuring

Amount based on the appraised value and cash-generating capacity, secured by a mortgage.

Disbursement

Capital is provided in a single payment at closing.

Operation

The asset is operated, repositioned or stabilised over the life of the loan.

Repayment

Sale of the asset or bank refinancing once income has stabilised.

Investment loan for companies, not a buy-to-let mortgage

Two different products for two different clients: the individual who buys to let and the company that invests in income-producing assets.

Individual

Buy-to-let mortgage

Recipient: Private individual
Purpose: Buying a home to let
Amount: Hundreds of thousands of euros
Who grants it: Retail banks
Assessment: Personal solvency and payslips

Professional

Investment loan

Recipient: Investor, company or vehicle
Purpose: Acquiring or refinancing income-producing assets
Amount: Millions of euros
Who grants it: Specialised funds and platforms
Assessment: Asset income and operator quality

Xenia Capital finances exclusively professional transactions. If you are looking for a mortgage to buy an investment property, your contact is a retail bank, not us.

Investment loan conditions

Investment loan conditions are set deal by deal: they depend on the asset's income, the business plan and the agreed structure.

Asset: Completed and operating
Minimum amount: 7.000.000 €
Maximum amount: Depending on the transaction
Leverage: Higher than bank leverage
Interest rate: Depending on the business plan
Fees: Depending on structure
Term: Medium and long term
Interest payment: Depending on cash generation
Disbursement: Single
Amortisation: Depending on structure

How to read investment loan conditions

Four concepts that determine how much capital you can raise and what it really costs.

LTV

Loan to Value

Percentage of the appraised value of the asset represented by the loan. Xenia can exceed typical bank levels depending on the asset's income and business plan.

DSCR

Debt Service Coverage Ratio

Ratio between the net income of the asset and debt service. It measures whether operations cover interest and amortisation.

PIK

Payment In Kind

Fees or interest that are capitalised and settled at maturity instead of being paid in cash.

Bullet

Payment at maturity

The principal is repaid in full at the end, with the sale or refinancing of the asset.

When to use an investment loan

Five scenarios where the asset already generates income but banks still don't reach far enough.

Acquiring an income-producing asset

Purchase of a hotel, a rental building or a residence with income, when banks cannot reach the leverage required.

Refinancing maturing debt

Replaces financing approaching maturity while the asset finishes stabilising its income.

Repositioning an asset

Change of operator, partial refurbishment or a change of segment that improves income ahead of bank refinancing.

Stabilising a newly completed asset

A bridge between practical completion and bank refinancing, while occupancy reaches its target level.

Releasing equity from a stabilised asset

Refinancing that returns capital to the investor to undertake new transactions.

Is your case different?

Tell us about the transaction and our investment team will assess whether it fits an investment loan or another of our products.

Investment loan or whole loan

A whole loan finances projects with construction; an investment loan finances assets that already generate income.

Variable	Investment Loan	Whole Loan
Project phase	Operation	Acquisition and construction
What it finances	Income-producing assets	Land and construction
Disbursement	Single	Land at closing and construction against certification
Leverage	Higher than bank leverage	Depending on structure
Amount	From 7 M€, depending on the transaction	From 7 M€, depending on the transaction
Interest rate	Depending on the business plan	Depending on tranches
Term	Medium and long term	Depending on the project phases
Typical exit	Bank refinancing or sale	Sale of units or refinancing

Does your transaction include major works? Then what you need is a whole loan or a development loan.

Investment loan versus bank financing

We don't compete with banks: we step in where they still cannot.

Reference

Traditional banking

Decision criteria: Historical income and scoring
Leverage on value: More conservative
Assets being stabilised: Usually excluded
Asset types accepted: Offices and standard residential
Interest structure: Periodic amortisation
Uses up bank risk capacity: Yes

Our proposal

Xenia's investment loan

Decision criteria: Asset income and operator quality
Leverage on value: Higher than bank leverage
Assets being stabilised: Accepted with an operating plan
Asset types accepted: Hospitality, residential for rent, alternative living
Interest structure: Partial or bullet at maturity
Uses up bank risk capacity: No

What assets we finance with an investment loan

Income-producing assets or assets being stabilised in Spain and Portugal.

Hospitality

Operating hotels and aparthotels, with an in-house or third-party operator.

Residential build-to-rent

Residential rental buildings, stabilised or being stabilised.

Alternative living

Coliving, flex living, serviced apartments and student housing.

Assets to reposition

Operating properties undergoing a change of operator, partial refurbishment or change of segment.

Requirements for an investment loan

For an income-producing asset, the analysis turns on three axes: who manages it, what income it generates and how the debt and its repayment are secured.

The investor

Proven experience
A track record in investing in or managing income-producing real estate assets.
Relevant track record
Comparable assets managed or repositioned by the same team or operator.
Own equity contribution
Significant own capital in the asset, supporting the leverage against value.
Solvent counterparties
Operator, manager and, where applicable, tenants with solvency and contracts in force.

The income-producing asset

Defined business plan
Income, operating costs and, where applicable, a budgeted improvement plan.
Viable financial structure
Debt service coverage by income and leverage consistent with the risk.
Clear exit strategy
Bank refinancing once the asset is stabilised, or sale of the property.

Security and control

Control over the asset
Ownership of the property, or a binding purchase contract if the financing is to acquire it.
Licences and planning status
Operating licences and zoning in order for the use under which the asset operates.
Transparency and reporting
Operating accounts, occupancy and contracts available to Xenia throughout the life of the loan.

What we don't finance with an investment loan

The investment loan finances professional income-producing assets. If your transaction is on this list, we won't be able to review it.

Mortgages for individuals
Moving primary residence
Residential self-development
Renovations of private homes
Personal loans
Non-real-estate assets
Assets outside Spain and Portugal
Refinancings below 7 M€

Documentation to apply for an investment loan

The asset's income is at the heart of the analysis, so operating documentation carries more weight than in a construction project. We start with whatever you have.

Executive Summary

Summary of the transaction: asset, use, current income, amount requested and purpose of the financing.

Financial information

Accounts of the owning company and the asset's operating statement for recent years.

Valuation

Appraisal of the operating property by an accredited valuer.

Planning information

Operating licences, planning status and encumbrances affecting the use of the asset.

Business Plan

Operating plan: occupancy, income, costs, planned investments and exit.

Investor's track record

Assets managed or repositioned by the team and the operator.

Financial model

Model with income, debt service coverage, stress scenarios and amortisation schedule.

Registry status

Land registry extract for the property, encumbrances and registered lease or operating contracts.

Investment loan application process

Six stages from receiving the asset to disbursement.

Step 01
Asset submission
You send us the summary of the property, its income, the purpose of the financing and the management team.
Executive summary
Step 02
Preliminary analysis
Our investment team checks income, occupancy and value and confirms whether it fits an investment loan.
Investment team
Step 03
Letter of intent
Amount, LTV, pricing, debt coverage, security and conditions precedent.
Term sheet
Step 04
Due diligence
Valuation, review of contracts and operating licences, legal analysis and KYC/AML.
External advisors
Step 05
Investment committee
Approval of the transaction and the final amortisation structure.
With Oaktree
Step 06
Signing and disbursement
Signing before a notary and transfer of funds in a single payment.
Notarial deed

Frequently asked questions about the investment loan

About financing for income-producing assets in Spain and Portugal.

What assets fit an investment loan?

Properties in operation or in stabilization with recurring income: hotels, residential for rent, student housing, coliving and flex living.

How much capital can I obtain?

We work with tickets from €7 million upwards. The final amount depends on the asset, the business plan and the structure of the deal: each case is analysed individually.

What are the costs?

Interest rate, arrangement fee and formalization costs, detailed in the term sheet before signing. Each deal has its own terms: we do not work with a single flat rate.

What is the analysis process like?

It starts with a conversation about the project and the basic documentation: location, permits, budget and business plan. From there, the team analyses the deal with real estate judgement and proposes a financing structure. The pace is set by the quality of the information available and the complexity of each deal.

What documentation do you need?

A description of the project, its location and planning status, the cost budget, the sales or operating plan, and information about the development team. That is enough for an initial assessment.