Motels
noun / A motel is typically a low rise roadside hotel designed for motorists, usually with parking areas provided adjacent to adjoining accommodation units. (portmanteau / motor + hotel)
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.
