Article Originally Featured in HotelBusiness.com
Private credit lenders have increasingly stepped into the void left by traditional banks, but not all are built the same, especially when it comes to hospitality. For sponsors like ARK Holdings, a seasoned hotel operator with a Florida-focused portfolio, finding a capital partner who understands the nuances of hotel operations and the complexities of today's capital markets is critical.
Peachtree Group recently demonstrated its ability to structure flexible, sponsor-aligned financing solutions through two bridge loans in Tallahassee, Florida: a $17.4 million floating-rate bridge loan for the 122-room Hampton Inn & Suites and a $12.75 million fixed-rate bridge loan for the 99-room Hilton Garden Inn. ARK Holdings owns both properties and these transactions are a case study of how Peachtree's multiple capital buckets allow customized structuring based on business plans, market conditions and sponsor objectives.
For the Hampton Inn & Suites, Peachtree provided a three-year floating-rate loan with two 12-month extension options, an ideal fit for a property that recently completed a multi-million-dollar PIP in September 2024. The Sponsor will use the term to stabilize performance, with plans to refinance into permanent financing. The floating structure offers flexibility to benefit from market rate movement and aligns with the short-term nature of the repositioning strategy.
In contrast, the Hilton Garden Inn received a five-year fixed-rate loan, a structure designed to support longer-term asset management and cash flow certainty following its more substantial renovation completed in August 2024. With both assets operating under the same Sponsor and adjacent to each other, ARK Holdings will benefit from cost savings through shared management and operations, enhancing overall performance.
Both loans reflect Peachtree's conviction in the Tallahassee market, which is poised to benefit from renewed government-related travel and corporate demand. Market ADR is expected to grow in line with inflation, and both hotels are projected to outperform their comp sets, a testament to the Sponsor's operational strength and capital investment.
More importantly, these deals reflect a deeper truth about hospitality-focused private credit: experience matters. Peachtree's deep roots in hotel ownership and operations allow it to underwrite beyond the spreadsheet, taking into account brand standards, PIP timelines and market seasonality. This understanding results in greater alignment with sponsors and better execution throughout the loan lifecycle.
At a time when capital markets remain selective, it is invaluable to have a lender who not only provides capital but also understands how hotels actually run. For sponsors navigating renovation-heavy business plans or managing complex portfolios, working with a lender like Peachtree Group, who brings operational know-how and flexible capital, is a strategic advantage. In a market where one-size-fits-all financing no longer works, Peachtree's approach proves that tailoring capital to the business plan is not just smart; it's essential.
Peachtree Group is a direct balance sheet lender focused on funding first mortgage bridge loans, mezzanine loans, preferred equity investments, and commercial property assessed clean energy (CPACE) financing. Jared Schlosser is responsible for Peachtree's hotel originations platform and its CPACE program.
2023 was a year marred by obstacles for borrowing across commercial real estate, particularly after a widespread crisis shook regional banks that are historically the biggest lenders in the space. Peachtree CEO Greg Friedman spoke with Hotel News Now about his prediction for 2024.
Insights Into the Lending Environment From Peachtree's Greg Friedman (costar.com)
ATLANTA (Feb. 2, 2024) – Peachtree Group announced the company originated a $34.5 million loan for the acquisition and renovation of a 312-unit multifamily property in Gainesville, Fla., on behalf of Coastline Management Groups (Coastline), a Hollywood, Fla. based service-oriented real estate management company. The property, Pavilion on 62nd, is a 25-building, 312-unit multifamily used previously for student housing.
The Peachtree Group team originated the floating-rate bridge loan over a three-year term, representing 61% of the stabilized appraised value.
The multifamily property contains 31.74 acres and features two-, three- and four-bedroom units with onsite property management, two clubhouses, two swimming pools, workstation cubicles, a game room, a media room, rentable event room, a gym, indoor racquetball and half-court basketball, sand volleyball court, dog park and package receiving center.
Coastline will use approximately $5.0 million of the bridge loan proceeds to renovate unit interiors, convert four-bedroom units to three-bedroom units, expand the onsite amenities and complete deferred maintenance on exterior and common areas.
Peachtree Group is an investment firm driving growth with a diverse portfolio of commercial real estate assets and other ventures. We’ve executed hundreds of investments since inception with a focus on real estate acquisition, development, and lending. Today, we manage billions in equity, augmented by services designed to protect, support, and grow our investments.
Doradus Partners has nabbed $41 million of bridge financing to refinance a Hilton-branded Charlotte hotel property, Commercial Observer has learned.
Peachtree Group, formerly Stonehill, provided the floating-rate loan on Doradus’ 181-room Home2 Suites by Hilton Charlotte Uptown. Click here to read more.
