Peachtree Deploys $1.1B in Commercial Real Estate Investments

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Charles Talbert
Director, Corporate Communications
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Peachtree Group, a diversified commercial real estate investment company, announced its credit division has closed $556 million in loan originations of the $1.1 billion the company deployed year-to-date. The remaining $526 million was deployed to acquire five hotels and undertake three new hotel development projects. The company also opened five hotels that were under construction as of September 2023.

“Commercial real estate owners who have benefited from an extended period of readily available, low-cost capital over the past 15 years are now confronting a new reality,” said Greg Friedman, Peachtree Group’s CEO.

The ability to refinance maturing debt is a growing concern with an estimated $1.9 trillion of U.S. commercial real estate debt maturing before the end of 2026.

“Commercial real estate participants are faced with the pressures of higher capital costs and tighter liquidity in sourcing capital for acquisition, recapitalizations and development strategies,” Friedman said.

Peachtree Group Credit, formerly Stonehill, ranked as the 8th largest U.S. commercial real estate hotel lender by the Mortgage Bankers Association 2022 loan origination rankings. As a direct commercial real estate lender, it offers permanent loans, bridge loans, mezzanine loans, commercial property-asset clean energy (CPACE) financing and preferred equity investments across all commercial real estate sectors, with its origins in the hospitality industry.

Notable credit transactions for hotels completed this year include:

  • A $47.9 million first mortgage loan for the construction of a 215-room Autograph Collection hotel in Huntsville, Ala., which is expected to open in 2024.
  • A $43.6 million first mortgage loan on the 220-room Hampton Inn New York-LaGuardia Airport to recapitalize the project and to cover the cost of deferred maintenance and CapEX.
  • A $42.2 million first mortgage loan on the 133-room Motif on Music Row (Nashville) to refinance the current debt and complete the property, which expects to open in November 2023.
  • An $8.4 million loan in CPACE financing to fund various energy-efficient and sustainability elements of a hotel under construction in Detroit, Mich.

Other commercial real estate sector transactions included:

  • A $52.0 million first mortgage loan for the construction of a 245-unit apartment in Mesa, Ariz.
  • A $42.0 million first mortgage loan for the acquisition of the Town Center at Cobb retail center in Kennesaw, Ga.
  • A $23.0 million first mortgage loan for the construction of a mixed-use development in Charlotte, N.C.

Today, banks are under regulatory pressure and need to shore up their balance sheets and liquidity positions, causing significant lending restrictions to commercial real estate. This traditional lender disruption further elevates private credit for owners and developers to execute their business plans.

“We are experiencing an uptick in activity, with more than half of the loans that we originated closing within the past 60 days,” said Jared Schlosser, Peachtree Group’s senior vice president, Credit. “We are targeting more than $1.0 billion in originations for 2023 with continued growth into 2024 as we anticipate interest rates to remain elevated and banks to further reduce exposure.”

Peachtree Group’s acquisition division completed five hotel acquisitions with a total of 677 keys.

  • Hampton Inn & Suites University Capital - Austin, Texas – 137 keys
  • Homewood Suites Vanderbilt - Nashville, Tenn.  - 192 keys
  • Hilton Garden Inn Atlanta North – Johns Creek, Ga. – 122 keys
  • Courtyard Atlanta Kennesaw – Kennesaw, Ga.– 100 keys
  • Home2 Suites by Hilton – Chandler, Ariz. – 126 rooms

“Our transaction volume remains on pace as we have historically acquired 10 to15 hotels annually. The overall U.S. transaction market is down year-over-year, primarily due to 2022 being an active year while debt was still relatively affordable debt a wide availability of regional lenders and improving operating fundamentals whereas in 2023, the tightening of the debt capital markets has materially impacted transaction velocity,” said Brian Waldman, Peachtree Group’s CIO. “We have been uniquely positioned to acquire most of the hotels off-market leveraging our deep relationship network to secure these institutional-quality assets. We are also unique among our competitors as we have the ability to be an all-cash buyer, eliminating lending risk and closing quickly.”

Peachtree Group expects market transactions to accelerate through the remainder of the year and continue into 2024.

Year-to-date, Peachtree Group’s development division has closed on three new projects representing $293 million in aggregate value:

  • Embassy Suites – Gulf Shores, Ala. – 257 keys
  • Caption by Hyatt – Nashville, Tenn. – 210 keys
  • AC by Marriott – Detroit, Mich. – 154-keys

In addition, the development team has opened five hotels with a combined development cost of approximately $119 million:

  • Hilton Garden Inn – Florence, Ky. – 123 keys
  • Hilton Garden Inn – Pensacola, Fla.– 102 keys
  • Hampton Inn – Delray Beach, Fla.– 143 keys
  • Hampton Inn and Home2 Suites – Lake Nona, Fla. – 150 Keys (80 Hampton Inn + 70 Home2 Suites)

The development division, which builds hotels on Peachtree Group’s behalf as well as through joint ventures with strategic partners, is expected to break ground prior to year-end on the construction of four more hotels with an aggregate value of $200 million.

CBRE projects new supply growth to average around 1% for the next three years, well below the amount of new supply growth experienced before the COVID-19 pandemic and less than the 2.5% pace of demand growth over the next three years.

“Supply growth of new hotel rooms continues to be hampered by the challenges from the pandemic and has been further impacted today with dislocation in the credit markets,” said Will Woodworth, vice president of investments, development, at Peachtree Group. “We believe supply will continue to be limited for the foreseeable future and have ramped up our development pipeline in response.”

If actual demand growth rates exceed what is forecasted, the hotel market could be facing a hotel room supply shortage.  This would fuel the growth in occupancy rates and compression in room rates.

“Despite headwinds in the broader markets, Peachtree is well-positioned, capitalized and oriented to strategically target the submarkets and demand segments where new hotels rooms, when realized, will flourish,” Woodworth said.

About Peachtree Group

Peachtree Group is an investment firm driving growth with a diverse portfolio of commercial real estate assets and other ventures. The company has executed hundreds of investments since its inception, focusing on real estate acquisition, development and lending valued at almost $9.0 billion in total market capitalization. Today, Peachtree manages over $2.5 billion in equity, augmented by services designed to protect, support and grow its investments.

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Peachtree Group Acquires Hilton Garden Inn Denver Tech Center

Peachtree Group ("Peachtree") announced the acquisition of the 180-room Hilton Garden Inn Denver Tech Center in Denver, Colo. Peachtree's hospitality management team will operate the property.

Peachtree Group ("Peachtree") announced the acquisition of the 180-room Hilton Garden Inn Denver Tech Center in Denver, Colo. Peachtree's hospitality management team will operate the property.

The seven-story hotel is ideally located in the heart of the Denver Tech Center, one of the Denver MSA's prominent employment hubs and the largest office submarket outside of the Central Business District, with 8.8 million sq. ft. of Class-A space. The area is situated near the intersection of Interstate 25 and Interstate 225, providing direct access to the Denver CBD and Denver International Airport.

The hotel further benefits from its proximity to the under-development Bellview Station, a 50+ acre, transit-oriented, mixed-use development. Upon completion, Bellview Station will comprise 2.2 million sq. ft. of Class-A office, 300,000 sq. ft. of retail; 1,800 high-end residential units and 5.0+ acres of green space. Prominent area employers include Comcast, Oracle, Microsoft, Zoom, Charles Schwab, Fidelity Investments, Newmont Mining and Western Union. The Bellview RTD light rail station provides direct commuter access to Union Station and Denver International Airport.

"We are excited to acquire this premium-branded hotel in a growing submarket with a variety of diverse and stable demand generators," said Michael Bernath, Peachtree's senior vice president, acquisitions. "The Denver economy is well diversified, with the city gaining recognition as a burgeoning tech hub. We believe the expansion of the R-Line, increased connectivity of the area and the completion of the transformative Bellview Station development will continue to make the Denver Tech Center an attractive destination for consumers and corporations alike."

 The hotel was last renovated in 2014. Peachtree will make substantial investments in the property, with comprehensive upgrades and enhancements to the entirety of the property, including the exterior, lobby area, bar and lounge, meeting rooms, guestrooms, guest baths, corridors, elevators and stairwells.

 "Upon renovation, the hotel will be the newest renovated property in the area and will be positioned to command a significant premium in daily rates," Bernath said.

 The Hilton Garden Inn Denver Tech Center marks Peachtree's second hotel in Denver, following its ownership of the Element Denver Park Meadows in Lone Tree.

 The financial terms of the transactions were not disclosed.

About Peachtree Group

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.

 

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Peachtree Group Approaches $750 Million in CPACE Financing

ATLANTA (Jan. 24, 2024) – In December, Peachtree Group achieved a significant milestone by securing $150 million in Commercial PACE (CPACE) financing, approaching $750 million completed since its inception in 2019. For the year, Peachtree Group completed 23 commercial property assessed clean energy financing transactions across the U.S. for a total of approximately $250 million in directly originated and balance-sheet funded CPACE financing.

ATLANTA (Jan. 24, 2024) – In December, Peachtree Group achieved a significant milestone by securing $150 million in Commercial PACE (CPACE) financing, approaching $750 million completed since its inception in 2019. For the year, Peachtree Group completed 23 commercial property assessed clean energy financing transactions across the U.S. for a total of approximately $250 million in directly originated and balance-sheet funded CPACE financing.

Commercial real estate faces a tough 2024 as trillions of dollars in debt comes due and refinancing gets harder, compounded by banks tightened lending standards.

“In this challenging lending market, Commercial Property Assessed Clean Energy financing has emerged as a crucial source of liquidity. This financing option is becoming increasingly essential as owners grapple with looming debt maturities and limited refinancing opportunities,” said Jared Schlosser, Peachtree Group’s senior vice president, origination and head of PACE financing.

CPACE has grown relatively quickly and, in just over a decade, has hit a cumulative $5.2 billion in U.S. commercial real estate financings, according to PACENation, confirming the growing market adoption and acceptance of this innovative financing tool.

“CPACE has been a game-changer by offering a unique advantage over other forms of financing with its long-term, fixed-rate financing that lowers the project's cost of capital,” Schlosser said.

Peachtree Group is one of the most active hotel commercial real estate lenders in the U.S., ranking as the eighth-largest U.S. hotel lender by the Mortgage Bankers Association in their most recent rankings. Of the CPACE transactions completed this year, roughly 50% were in hospitality.

“CPACE financing aligns with the financial, environmental and guest experience goals of hotels, making it a popular choice for owners looking to improve energy efficiency, reduce costs and enhance their sustainability initiatives,” Schlosser said.

Notable CPACE transactions completed this year include:

Hospitality

·        The Thompson, Palm Springs, Calif.

·        El Caminante, Dana Point, Calif.

·        The Marriott Tribute Hotel, St. Augustine, Fla.

·        Palihotel, San Francisco, Calif.

·        DoubleTree by Hilton Youngstown Downtown, Youngstown, Ohio

 Non-Hospitality

·        950 3rd Street, Washington, DC(Multifamily)

·        Reserve at Vinedo, Paso Robles, Calif. (Multifamily)

·        Old City Hall, Tacoma, Wash. (Mixed-Use)

 “This innovative financing mechanism empowers property owners across all sectors to embark on energy-efficient upgrades, renewable energy installations, and water conservation initiatives, all while minimizing their financial burden,” Schlosser said.

To learn more about CPACE Financing contact:

About Peachtree Group

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.