Motels

Freehold Going Concern

This is a motel in its entirety made up of the business and the land and buildings. It has not been split.

Lease

This is the long term document, that outlines the terms agreed between the lessee and the landlord.

Leasee

Owns the leasehold and pays annual rental to the lessor.

Lessor

Also known as the investor or landlord, the lessor owns the land and buildings and receives rent from the lessee.

Freehold Passive Investment

This is the terms used to describe the ownership of a property where a lessee is in place.

Rent

This is the sum of money agreed between the lessee and the lessor to be paid, often monthly in advance, for the rental of the land and buildings by the lessee.

Adjusted Net Profit

Is the net profit after addbacks.

Add Backs

Are any expenses in the profit and loss statement that would not apply to an incoming purchaser. As an example if a current owner has a mortgage, then the interest payment would be specified in the profit and loss. These would be an addback as it would not a cost an incoming purchaser would have to run the business.

Due Diligence

Is the period of time a purchaser has to verify the legal and financial aspects of a transaction.

Options

Most lease documents are made up of an initial fixed term and then broken down into ‘options’.

Return

This is the percentage of the net profit that equates to the sale price.


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