Barron’s: The surprising case for investing in real estate now
Peachtree Group CEO Greg Friedman sees opportunities in hotel development and real estate debt, citing strong travel demand, limited new hotel supply and attractive loan yields.
The Opportunity in Underinvested Hotels
Years of deferred renovations, rising construction costs and more expensive debt are putting pressure on hotel owners. At the same time, limited new supply can make well-located existing properties difficult to replace.
The resulting opportunity is not simply to buy rundown hotels at a discount. It is to find hotels where underlying demand remains strong but the property, ownership structure or financing needs to be reset.
Greg Friedman, CEO of Peachtree Group, and Michael Bernath, SVP of Acquisitions and Dispositions, discussed how investors can distinguish those opportunities from hotels suffering more fundamental impairment.
Why Are Underinvested Hotels Coming to Market?
Several pressures are converging.
Many hotels deferred renovations during and after COVID. Those improvements are increasingly difficult to postpone as brands enforce property improvement requirements and hotels compete for guests.
Renovations have also become more expensive. Bernath estimates that a soft-goods renovation costing roughly $7,000 to $10,000 per key before COVID could cost approximately $20,000 to $25,000 today.
Financing adds another layer.
Limited-service hotel transaction volume reached $23.2 billion in 2021 and $26 billion in 2022, according to figures Bernath cited in the podcast. Some three- to five-year bridge loans associated with that acquisition period are now maturing or have already been extended.
Refinancing into a higher-rate market while simultaneously funding a PIP can require owners to contribute significant additional equity.
As Bernath explains, the distress may therefore reside in the capital stack rather than the hotel.
What Makes an Aging Hotel an Attractive Investment?
Physical condition alone does not determine whether a hotel offers value.
Investors need to understand why the hotel is underperforming.
One useful measure is RevPAR index, which compares a hotel’s revenue per available room with its competitive set.
If a hotel historically should outperform its competitive set but has fallen behind because its rooms or common areas are dated, renovation may offer an opportunity to recover market share.
If the hotel and its competitive set are both deteriorating, however, renovations may not solve the underlying problem.
Bernath summarizes the distinction simply: “Not all renovations are created equal from an ROI perspective.”
Why Does the Type of Hotel CapEx Matter?
Hotel capital expenditures can address very different problems.
Guest-facing investments may include rooms, furniture, finishes and other visible improvements. Deferred maintenance may involve mechanical, electrical, plumbing, roofing or other building systems.
Both can be necessary. They do not necessarily offer the same potential return.
As Bernath explains, spending $40,000 per key behind the walls presents a different investment calculation than putting the same amount into cosmetic, guest-facing improvements that may support improved pricing or competitive performance.
Investors therefore need to determine whether CapEx is expected to restore lost competitive position, support higher room rates, meet brand requirements, address deferred maintenance or protect existing performance rather than increase it.
Why Does Limited Hotel Supply Matter?
The opportunity in existing hotels is occurring while new supply remains unusually constrained.
Bernath says the current pipeline of actual deliverable hotel assets is below 1%.
High construction and financing costs are part of the reason. As Bernath puts it, “Low supply and high construction costs are the same fact viewed from different directions.”
That environment can benefit existing hotels in markets with durable demand because fewer new properties are entering their competitive sets.
It also helps explain why acquisitions may currently offer a more attractive path than development in many markets, although Bernath continues to see selective development opportunities where demand and supply conditions support new construction.
Is Hotel Transaction Activity Recovering?
The Wall Street Journal data referenced Friedman cited showed nationwide hotel sales increasing 28% during the first half of 2026 compared with the same period in 2025.
Bernath, however, cautions that the recovery is uneven.
Luxury and urban full-service hotels have driven much of the increase, while select- and limited-service transaction volume remained down approximately 11% to 12% through the second quarter.
He nevertheless sees catalysts for a more active transaction market as debt maturities, renovations, lender pressure and investor fatigue push more owners toward decisions.
Three Key Takeaways
1. Capital-stack distress can create opportunity without asset-level distress.
An owner facing expensive refinancing and substantial renovation requirements may sell even when the hotel continues to serve a healthy market.
2. Renovation spending must have an investment thesis.
The amount of CapEx matters less than what it fixes and whether the spending can improve competitive performance.
3. Demand matters more than a cheap purchase price.
Buying below replacement cost is useful only in context. Investors still need sustainable demand, an attractive basis and a credible path to improving the property.
Frequently Asked Questions
What is an underinvested hotel?
An underinvested hotel is a property where renovations, maintenance or other capital expenditures have lagged what is needed to maintain its physical condition, brand standards or competitive position.
What is a hotel PIP?
A property improvement plan, or PIP, specifies renovations and upgrades required by a hotel brand, often in connection with an ownership change or as part of maintaining franchise standards.
Why are hotel owners facing more renovation pressure?
Renovations deferred during and after COVID are becoming harder to postpone, while renovation costs have risen and brands are becoming more assertive about quality requirements.
Is buying an existing hotel better than developing one?
It depends on the market. Bernath currently sees acquisitions as more compelling broadly because high construction costs and limited financing make many developments difficult to justify. Select markets with limited supply and strong demand can still support new development.
What should investors look for in a hotel renovation opportunity?
The episode emphasizes durable local demand, competitive-set performance, the nature and cost of required CapEx, acquisition basis and whether distress stems from the hotel itself or its capital structure.
Listen to Peachtree Point of View for Greg Friedman and Michael Bernath’s full discussion of hotel acquisitions, deferred CapEx, limited new supply and how they evaluate value-add opportunities in today’s hospitality market.
Peachtree Completes $524M in Government-Enabled Financing
Lodging - Peachtree Group announced that it has completed approximately $2.2 billion in private credit activity year-to-date in 2026, including approximately $524 million in government-enabled financing through Small Business Administration (“SBA”) 7(a) and Commercial Property Assessed Clean Energy (“C-PACE”) transactions.
Peachtree’s government-enabled financing capabilities include SBA 7(a) loans originated through First Western SBLC, C-PACE financing enabled through applicable state and local programs, and USDA B&I-guaranteed financing for eligible rural businesses and real estate projects.
Statements From Leadership
“Borrowers are navigating a market in which the right capital is not always available through a single conventional lending channel,” said Greg Friedman, managing principal and chief executive officer of Peachtree Group. “Our objective is to bring the appropriate tools to each transaction, whether institutional private credit, SBA financing, C-PACE, USDA B&I or a combination of those solutions, so capital can be structured around the opportunity.”
“Each program addresses a distinct capital need, but the value of our platform is the ability to consider them together,” said Jared Schlosser, head of originations and C-PACE at Peachtree Group. “We have already demonstrated that by layering C-PACE with USDA B&I financing, allowing us to address different needs within the same transaction. That flexibility gives us more ways to structure capital around the asset, the borrower and the business plan.”
“There is a significant part of the hotel market where owners need financing that does not fit neatly into a conventional lending box,” said Brent LeBlanc, executive vice president of business development at Peachtree Group. “Having multiple financing capabilities allows us to serve borrowers at different stages, from entrepreneurs acquiring their first hotel to experienced owners expanding their portfolios and institutional sponsors executing much larger transactions.”
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Opportunity Zones 2.0: What Investors Need to Know About 2027 Changes
Executive Summary
Opportunity Zones are entering their second phase. Starting in 2027, the program becomes permanent, capital gains get a rolling five-year deferral instead of a fixed deadline, and rural investments qualify for a larger basis step-up. Zones will also be redesignated every 10 years going forward. These changes make Opportunity Zones easier to fold into long-term investment planning, but they don't change the importance of underwriting the investment itself.
Opportunity Zones 1.0 vs. 2.0
Opportunity Zones will look materially different beginning in 2027. The key changes are summarized below.
The first new round of Opportunity Zone designations takes effect January 1, 2027, beginning a recurring 10-year redesignation cycle. For investors evaluating Opportunity Zones ahead of 2027, five questions stand out.
How Does Tax Deferral Change Under OZ 2.0?
OZ 2.0 replaces the program-wide 2026 recognition deadline with a five-year deferral period for qualifying investments made beginning in 2027. Deferred gains are generally recognized five years after the investment, unless an earlier inclusion event occurs.
Under OZ 1.0, deferred gains generally had to be recognized by December 31, 2026, regardless of when the investment was made, making the benefit progressively less valuable as the deadline approached.
Under OZ 2.0, each qualifying investment effectively receives its own five-year clock. Will Woodworth, senior vice president of investments at Peachtree Group, expects the change to allow better tax planning and support “more consistent cash flows into the space.”
What Basis Step-Up Do Investors Receive Under OZ 2.0?
Investors who hold a qualifying OZ 2.0 investment for at least five years receive a 10% basis step-up, while investments in a Qualified Rural Opportunity Fund (QROF) receive a 30% step-up after five years.
Under OZ 1.0, investors could receive a 10% increase after five years and another 5% after seven years, although the program’s fixed timeline limited those benefits for later investments.
OZ 2.0 also reduces the substantial-improvement threshold for property located entirely within qualifying rural Opportunity Zones from 100% to 50%. These incentives could make some rural projects more viable, but investors still need to independently underwrite demand, liquidity, financing and exit risk.
Will Opportunity Zones Be Permanent Under OZ 2.0?
Yes. OZ 2.0 makes Opportunity Zones a permanent part of the tax code, with qualifying areas refreshed every 10 years.
Under OZ 1.0, investors faced an eventual program expiration and a fixed 2026 recognition date. Permanence allows investors, developers and capital allocators to evaluate Opportunity Zones as a long-term investment framework rather than an incentive approaching expiration.
As Woodworth put it, permanence makes Opportunity Zones an actionable strategy “not just right now, but for decades into the future.”
Will the Opportunity Zone Map Change in 2027?
Yes. Under OZ 2.0, Opportunity Zones will be redesignated every 10 years, with the first new round taking effect in 2027. That differs from OZ 1.0, where the original map was essentially static.
Eligibility also becomes more targeted, with the qualifying median-family-income threshold declining from 80% to 70% and the contiguous-tract provision eliminated.
As a result, markets that qualified under OZ 1.0 may not qualify under OZ 2.0, while new eligible areas will emerge.
Does OZ 2.0 Change the 10-Year Holding Period?
No. Investors generally still need to hold a qualifying Opportunity Zone investment for at least 10 years to access the program’s principal long-term tax benefit.
That remains an important consideration for real estate investors because a decade can span multiple property and credit cycles. Financing, valuations, supply and demand, and liquidity may look very different at exit than at acquisition.
The improved tax framework therefore does not change the importance of investment fundamentals, including basis, leverage, refinancing assumptions and sponsor execution.
OZ 2.0 also introduces a new 30-year rule worth noting. Under OZ 1.0, an investor only received the step-up to fair market value by selling the investment after the 10-year mark. Under OZ 2.0, that step-up to fair market value happens automatically at the 30-year point, regardless of whether the investor has sold.
What Should Investors Consider Before Investing in OZ 2.0?
Investors should first ask whether the underlying investment is attractive without the Opportunity Zone tax benefits.
The 2027 relaunch makes Opportunity Zones easier to evaluate as part of ongoing capital allocation rather than as a deadline-driven tax strategy. But the fundamental question remains:
Would this be an attractive investment without the tax benefit?
If the answer is no, a better Opportunity Zone structure may not change it. If the real estate, basis and capital structure are compelling, however, OZ 2.0 provides a more predictable framework for evaluating the after-tax return across multiple investment and real estate cycles.
Watch Will Woodworth explain the key changes coming with Opportunity Zones 2.0 and what investors should know:
This article is for informational purposes only and does not constitute tax, legal or investment advice.
Peachtree Group Earns Fourth Consecutive Inc. 5000 Recognition
Peachtree Group, a vertically integrated private investment firm active in commercial real estate, private credit and hospitality, today announced it has been named to the 2026 Inc. 5000, marking the firm’s fourth consecutive year on the magazine’s annual ranking of the fastest-growing private companies in the United States. Peachtree ranked 3,831 on this year’s list, with three-year revenue growth of approximately 67%.
Sustaining that pace is rare. Research from Stanford Graduate School of Business and IESE Business School found that only about 30% of companies on high-growth rankings return the following year, implying that roughly 3% would be expected to appear four successive years.
For Peachtree, the growth behind the ranking has also meant a larger team and a wider set of career paths. The firm has grown to over 3,700 employees across its investment, lending, development and hospitality businesses, with approximately 10% of open roles filled internally over the past year.
“We’re grateful for the recognition, but what I’m most proud of is the ecosystem behind it,” said Greg Friedman, managing principal and CEO of Peachtree. “We’ve built a place where someone can start in one division and build an entire career here, moving from real estate into credit, from underwriting into hotel operations, from analyst to principal, without ever having to leave. Growth on a list is a byproduct. Advancement in people’s careers is the point, and it’s the reason we’ve been able to maintain our expansion through different market environments.”
The recognition follows another milestone for the firm. Earlier this year, Peachtree was named to the inaugural PERE Credit 100, ranking among the world’s leading commercial real estate private credit managers. The annual ranking measures firms based on institutional capital raised for private real estate credit strategies over the previous five years.
“Together, these recognitions tell a consistent story,” Friedman added. “The Inc. 5000 acknowledges our ability to scale a high-growth business over time, and the PERE Credit 100 reflects the institutional platform we’ve built in commercial real estate credit. Both recognitions reveal the same foundation, a team that has earned the confidence of our investors and our partners.”
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