Hilton Garden Inn, Phoenix AZ
With Maturity Looming, Peachtree Helps Execute Business Plan Including Hotel PIP
Peachtree Group worked with the Sponsor to pay off its maturing loan while executing a business plan to upgrade its property to better compete in the marketplace and retain its Hilton flag.
As an experienced hotel lender specializing in creative financing solutions, Peachtree originated a $12.5MM bridge loan for a 126-room Hilton Garden Inn in Phoenix, Ariz., with a repeat Sponsor.
In 2014, Peachtree actively supported the Sponsor by providing a mezzanine loan, complemented by a senior loan from another lender. The mezzanine loan was repaid in December 2019, while the senior loan underwent refinancing as a component of this transaction.
The hotel, which opened in 2008, recently received an unacceptable Franchise Quality Assurance (FQA) score just as the Sponsor's franchise agreement with Hilton was soon to expire.
The Sponsor will use a portion of the loan proceeds to complete an estimated $4.0MM property improvement plan (PIP) to upgrade the hotel in time to renew a 20-year Hilton license agreement.
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Strong Basis & Limited Supply
Peachtree's total loan basis is $99k/key. Most recent comparable transactions in the market averaged $185k/key, representing an 87% premium to Peachtree's total loan basis. The hotel has access to the Hilton Honors loyalty program, which has over 146MM members. There is only one hotel under construction within a 5-mile radius of the property, a Home2 Suites.
Experienced Management Company
The hotel is managed by Aimbridge Hospitality, a full-service hotel management company with expertise in managing full-service and select-service hotels of all major brands globally. With a managed portfolio of 1,377 properties worldwide, Aimbridge's management teams specialize in distinct verticals, providing focused management depending on service level.
Proximity to Demand Drivers
The hotel is in an industrial/office sector of North Phoenix at the cross-section of Interstate 17 and State Route 101. Businesses in the area include Chubb Group of Insurance Co (0.3mi), Honeywell Deer Valley (1.4mi), USAA Corporate Campus (1.5 mi), PetSmart Corporate Office (2.6 mi), and TSMC Arizona Corporation (6.5 mi), which has a $40B expansion in progress.
Also close by is the HonorHealth Deer Valley Medical Center, a 204-bed full-service hospital with three medical buildings and an ongoing$170MM expansion.
The area's tourism hub is 17 miles from the Hotel, which hosted 19.5MM people in 2022, including a million international visitors. The area includes State Farm Stadium, which hosts approximately 200 events per year and is home to the NFL's Arizona Cardinals, and the Footprint Center, which can host 18,000 attendees and is home to the NBA's Phoenix Suns and WNBA Phoenix Mercury.
