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.
As cities grapple with limited resources and urban revitalization, one innovative approach gaining traction is adaptive reuse. By repurposing existing structures, such as warehouses, factories and office buildings, adaptive reuse offers a sustainable solution to create affordable housing. However, financing these projects can pose a significant challenge.
The priority of financing an adaptive reuse project is finding an experienced lender, which will increase the chances of a smooth funding process.
The challenges and risks associated with repurposing existing structures can make traditional lenders hesitant to provide financing. In such cases, alternative lenders like, who specializes in adaptive reuse and has a track record of working with these projects, can be a valuable resource.
Stonehill has a deep understanding of the unique considerations involved in adaptive reuse, such as the complexities of assessing the property’s value, estimating renovation costs, and managing potential environmental or structural issues. As a result, Stonehill is usually more willing to provide flexible terms and agreements to accommodate the specific needs and challenges of adaptive reuse projects.
Stonehill recently financed $11 million for the conversion of a former 195-key conference hotel into 195 affordable studio apartment units. The hotel’s conference space was transitioned to resident amenities including a fitness center, common laundry facilities, lounge areas, large outdoor courtyard and co-working space.
In addition to the sponsor’s experience in workforce housing, the business plan was attractive to Stonehill because of the strong traditional apartment market and demonstrated population growth in the area. And, once complete, the development offers new apartment product at affordable rents for the market.
Adaptive reuse provides various benefits, making it an attractive option for affordable housing development.
Considering these benefits, adaptive reuse is a multifaceted approach that addresses the affordable housing crisis and promotes sustainability, heritage preservation and community revitalization. It is an innovative solution that leverages existing resources to create positive social and environmental impacts in urban areas.
Working with Peachtree Group in financing adaptive reuse into affordable housing can increase the chances of securing the necessary funding, navigating the process’s complexities, and ensuring a higher likelihood of project success. Contact me today to discuss your project dsiegel@peachtreegroup.com.
Daniel Siegel is principal and president of Peachtree’s commercial real estate lending group overseeing the group’s expansion into commercial real estate lending. Before joining Peachtree, he was managing director at a large private equity firm and the head of high-yield investments. Prior to joining that firm, Siegel was vice president of acquisitions at Rialto Capital, overseeing the distressed loan acquisitions platform. During his tenure at Rialto, Siegel directly oversaw the acquisition of commercial real estate loans on both domestic and international opportunities. Additionally, he developed the firm’s small balance loan acquisition platform and led the company’s first European acquisition. Siegel has a bachelor’s degree in finance from Tulane University.
Contact Daniel at dsiegel@peachtreegroup.com.
Peachtree CEO Greg Friedman was quoted in this recent CoStar Group article by Sean McCracken talking about the lending environment for hotels in 2024 and the opportunities for investor, operator, lenders like Peachtree Group.
"Most traditional lenders aren't lending," said Friedman. "Forty percent of the debt market is traditionally made up of regional banks, community banks, national banks, and it's been in the press that banks are under pressure. So 40% of the market is struggling, the CMBS market makes up close to 25% to 30% of lending to hotels and that market is well under pressure, as well."But he said what is left of the market is attracted to hotels due to "really good asset-level performance."
Lending Conditions Likely More Certain for Hotels in 2024 (costar.com)
