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.
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.
Securing financing in today's capital markets is one of hotel owners and developers' greatest hurdles. Post-pandemic optimism has collided with a far more complex economic landscape defined by stubbornly high interest rates, cautious lenders and evolving risk appetites. While banks and CMBS lenders once anchored most hotel capital stacks, private credit has stepped into a central role, becoming not only an alternative but often the primary solution in today's environment.
Commercial Observer - Sun Development & Management Corporation has inked $67.5 million of bridge financing for the recapitalization of a newly-opened Hilton-branded hotel in Nashville, Commercial Observer has learned.
Peachtree Group originated the three-year loan with two one-year extension options for the developer’s 187-room Printing House – Tapestry Collection by Hilton property that debuted this spring.
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