1. 1 Hotel Financing HotCop 2011 Peter Toftager SEB – Commercial Real Estate 26 May 2011

2. 2 Which concepts, locations, chains and brands are most likely to make it through the eye of the needle ? Stating the obvious – from the SEB perspective: The operational cash flows stemming from hotel operations are more volatile than most other asset classes within real estate. Higher volatility calls for higher equity investments as the banks are not willing to carry investor risk. The bank should not be at risk even in recession times with low occupancy & poor profit levels. The volatile cash flow can be mitigated by a strong & professional operator (= tenant). The risk is still on the operation, if the operator is not able to survive tough times and/or substantially deliver under (partly) turnover-based lease agreement, the hotel investor might still be unable to service the debt obligation towards the bank.

3. In such an environment SEB will: Focus on financially strong hotel investors with professional insight in the operation (the relationship) Focus on the financial & credit structure – especially the expected cash flow (ICR), the LTV and the occupancy trend benchmarked to the market Focus on the track record/the field of operation of the investor and the operator The match between Location of the property and Hotel Concept Which concepts, locations, chains and brands are most likely to make it through the eye of the needle ?