In a rapidly shifting economic environment, hotel developers and lenders are adapting their strategies to secure successful outcomes for hotel projects. We sat down with Jared Schlosser, EVP of Hotel Lending and Head of CPACE at Peachtree Group to discuss how rising interest rates and inflationary pressures are influencing lending criteria and financial planning.
Q: Given the rising interest rates and inflationary pressures, how are lenders adjusting their underwriting criteria for hotels?
Jared Schlosser: Right now, it's all about cash flow. It’s hard to underwrite any sort of pro forma growth unless there’s a real story behind it. Lenders are focused on the cash flow, and if you can achieve a 13% debt yield or higher, you qualify for generally permanent debt, CMBS, life company, or even bank takeouts. If you don’t meet that threshold, then you typically fall into the private credit space, which is where Peachtree Group comes in.
Q: What are the current trends in loan terms, such as loan-to-value (LTV) ratios or interest rates?
JS: It’s been quite varied, depending on what each lender's risk threshold is. The biggest trend I’m seeing is uncertainty around how long rates will stay elevated. Because of that, borrowers are seeking flexibility. They’re willing to pay a premium for loans with shorter yield maintenance or reduced prepayment penalties. Many are hesitant to lock into long-term fixed-rate debt like they used to.
We provide both fixed-rate and floating-rate loans, but even with fixed-rate products, borrowers are trying to secure as much flexibility as possible. We’re still getting to 70% loan-to-cost (LTC) or LTV, sometimes pushing up to 75% or scaling back, depending on our underwriting. In contrast, the banking market is closer to 50-55% on average, which highlights the difference between our space and traditional banks.
Q: How should developers adapt their financial strategies in this market?
JS: I always say in a volatile market, get ahead of it. Be proactive—get ahead of your maturity dates and start conversations early, whether it’s with us or other competitors in the space. Early engagement is key right now because the future is so uncertain.
With upcoming elections, the volatility surrounding Federal Reserve policy, and questions about whether rates will be cut or stay elevated longer than expected, liquidity is fluctuating. The sooner borrowers are out in the market looking for refinances or construction financing, and the more well-prepared their packages are, the better their chances of securing favorable terms.
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, lending to all commercial real estate asset classes with a specialty in hotel financing. The Peachtree Group team has executed more than 297 transactions, originating more than $4.5 billion for projects seeking capital to complete acquisitions, recapitalizations, refinancing and renovations.
This article is republished with permission from Green Street News.
The developer of an apartment complex in northwest Washington state has lined up $57.5 million of senior debt from Peachtree Group, including $29 million of commercial Property Assessed Clean Energy financing.
Grandview North is on track to complete the 350-unit Harrington Place, in Ferndale, by January 2026. Atlanta-based Peachtree funded $13 million of the debt at closing on Jan. 28.
The fixed-rate C-PACE loan has a 30-year term. The rest of the senior financing package, brokered by CapNorth, was structured as a $28.5 million, floating-rate construction loan with an initial term of 18 months, plus extension options.
As part of the deal, the term of an outstanding $20 million mezzanine loan from Hickory CRE Lending was adjusted to match that of the Peachtree floater. The project is expected to cost $90 million, which pegs the overall loan-to-cost ratio at roughly 86%.
New York-based Hickory originated its fully funded subordinate loan as part of a $77 million debt package that Arlington, Wash.-based Grandview lined up in April 2023. The package also included a $57 million senior-debt commitment from Bayview Asset Management of Coral Gables, Fla. Bayview’s portion, which never funded because construction was postponed due to permitting delays, was split between a $45 million construction loan from its Oceanview Life and Annuity affiliate and $12 million of C-PACE financing from its Bayview PACE unit.
Developers can use C-PACE loans, which are repaid via assessments collected with property taxes, to help finance commercial buildings that meet certain standards for energy efficiency and sustainability. For its part, Peachtree offers borrowers debt throughout the capital stack by providing such financing in conjunction with traditional construction and bridge loans, president Daniel Siegel said.
Harrington Place will comprise 11 buildings on an 18-acre site that Grandview has owned since late 2020. The 101 studios and 150 one-bedroom, 63 two-bedroom and 36 three-bedroom units will have quartz counters, stainless-steel appliances and full-size washer/dryers.
Amenities will include fitness, game and party rooms, a lounge, a playground, indoor and outdoor athletic courts, and a patio with grills. The property is at 6276 Portal Way, a half-mile west of the Nooksack River and 10 miles northwest of Bellingham, a growing city between Vancouver, Canada, to the north and Seattle to the south.
ATLANTA (Feb. 10, 2025) – Peachtree Group (“Peachtree”), a diversified commercial real estate investment platform, deployed $1.6 billion in credit transactions in 2024, marking a 54% increase from 2023. This growth highlights Peachtree’s reach in private credit lending and its ability to provide financing solutions across multiple property types, including hospitality, multifamily, industrial and specialty assets.
Founded in 2007, Peachtree has evolved into a vertically integrated investment firm, strengthening its ability to source, underwrite and manage assets. Since 2010, it has played a key role in expanding private credit in commercial real estate, supporting hotels and other commercial real estate sectors. Through strategic growth, the firm has deepen edits leadership and expertise, accelerating expansion in commercial real estate lending.
The majority of Peachtree’s 2024 credit investments were concentrated in the hospitality and multifamily sectors, with $876 million and $392.3 million in transactions completed, respectively. The remaining $297.4 million was strategically deployed across industrial, land, mixed-use, retail, office and single-family residential asset classes, reinforcing Peachtree’s commitment to a diversified lending strategy.
“As we reflect on 2024, we executed a record level of transactions while expanding our lending platform to serve a broader range of commercial real estate asset classes,” said Greg Friedman, CEO and managing principal of Peachtree. “Looking ahead, we expect outsized growth by leveraging our private credit lending programs and launching additional initiatives to address underserved niches in the market.”
Since strengthening its credit team, Peachtree has executed more than $1 billion in commercial real estate transactions, underscoring its reach and execution capabilities in a challenging lending environment.
“With sustained high interest rates, reduced bank lending and $4.5 trillion in U.S. commercial real estate debt maturing by 2028, the need for alternative financing solutions is more critical than ever,” said Daniel Siegel, president and principal, CRE at Peachtree. “At Peachtree, we help borrowers navigate rising capital costs and liquidity constraints by offering flexible financing solutions across multiple asset classes.”
The Mortgage Bankers Association recognized Peachtree as the seventh-largest investor-driven commercial real estate lender in the U.S., further solidifying its position as a top-tier financing partner.
As a direct commercial real estate lender, Peachtree offers a full spectrum of financing solutions, including permanent loans, bridge loans, mezzanine financing, CPACE (Commercial Property-Assessed Clean Energy) loans and preferred equity investments. Expanding its capabilities, Peachtree also launched a Triple Net Lease (NNN) financing program last year to further support sponsors.
In addition to its broad lending platform, Peachtree continues to lead in CPACE financing, setting a record in2024 with 22 transactions totaling $316.6 million. The CPACE team also recently surpassed $1 billion in total transactions—an achievement few companies in the industry can claim—further cementing Peachtree’s position as a leader in structured financing solutions.
“As Peachtree continues to scale its lending platform, it remains committed to providing capital solutions that drive long-term value for borrowers and investors alike,” Friedman added.
About Peachtree Group
Peachtree Group is a vertically integrated investment management firm specializing in identifying and capitalizing on opportunities in dislocated markets, anchored by commercial real estate. Today, the company manages billions in capital across acquisitions, development and lending, augmented by services designed to protect, support andgrow its investments. For more information, visit www.peachtreegroup.com.
In the latest episode of Peachtree Point of View, host Greg Friedman delves into the world of private credit lending with Daniel Siegel, head of Peachtree Group's commercial real estate lending platform. Together, they unpack how today's evolving market landscape is opening doors to compelling private credit investments.
The market is at an inflection point, with treasury yields north of 4.5% and nearly $2 trillion in commercial real estate loans maturing over the next 24 months. Siegel observes, "If you bought in 2020-2022, there's a good chance you've experienced some value deterioration." This trend has pressured multifamily valuations, which have dropped by 20-25%, yet fundamentals remain solid, with properties continuing to maintain healthy occupancy.
The discussion highlights an intriguing paradox: while many assets face valuation challenges, they continue to perform well operationally. This disconnect is creating opportunities for sophisticated investors, particularly as banks contend with increasing regulatory pressure to reduce their commercial real estate exposure. Siegel shares an interesting case study of a Massachusetts multifamily project where his team stepped in to provide a creative financing solution that benefited both the original lender and the borrower.
The episode also offers nuanced insights into various property sectors. As mentioned, multifamily, while grappling with near-term pricing pressure, holds strong long-term fundamentals. Hospitality demonstrates remarkable resilience, leveraging its daily pricing power. Retail has emerged stronger after years of supply rationalization. Conversely, office assets present a mixed picture—Class A properties maintain performance, while secondary assets face substantial challenges.
For investors exploring private credit opportunities, Siegel emphasizes the importance of working with experienced managers equipped with the infrastructure for loan servicing and workouts. "It's easy to write loans," he notes. "It's the infrastructure needed to work them out that matters."
Drawing on Peachtree Group's 17-year track record and over $11 billion in commercial real estate investments, the discussion underscores the firm's ability to provide creative financing solutions while maintaining conservative underwriting (typically 65-70% LTV).This approach has helped the firm to capitalize on market dislocations while effectively managing risk.
With its seasoned expertise and innovative strategies, Peachtree Group continues to lead the way in delivering strong risk-adjusted returns on its investments. This episode is filled with actionable insights and strategic guidance for navigating today's complex market environment.
