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Commercial Observer: Peachtree Group Provides $43M Loan in Fort Lauderdale Hotel Recap
Peachtree Group originated a $43.0MM recapitalization of the 218-room dual-branded Home2 Suites/Tru Fort Lauderdale Downtown.
Statista estimates the value of the commercial real estate market will reach $24.67 trillion in 2023. According to the Deloitte Center for Financial Services 2024 industry outlook, half the industry expects the cost of capital and capital availability to worsen through next year. Couple that with the $1.5 trillion wall of debt maturing before the end of 2025 and it’s easy to understand the trepidation in the market today.
But we’ve been here before.
The credit team at Peachtree Group has completed hundreds of transactions worth north of $15 billion. In our collective careers, we have seen borrowers navigate unstable markets, such as what we are experiencing today, in a variety of different ways.
Here are five tips for borrowers trying to navigate today’s difficult market, and secure funding for their project.
Acknowledging your Situation
It has been a borrower’s market for several years now, and this is not one of them. Do not forsake the term sheet in your hand – the Fed has raised interest rates 11 times since March of 2022. Spending too much time on turns of a term sheet might leave you losing any spread concessions to increases in the benchmark or, even worse – lenders deciding to pull terms altogether. If you have an offer from someone you trust, you might want to take it.
Grass Isn't Always Greener
On existing projects, your current lender is most likely your best friend. A lender willing to give you an extension is gold in this market. Getting additional terms out of your current lender is likely the least costly option, even if it comes with fees and a rate increase – it likely is still significantly less costly than what the current market will give you. However, I hope that you have been a good borrower – up to date on deliverables, communicative about the status of your project, etc. – make no mistake, the bank is doing you a favor, don't give credit committee a reason to say no.
Have you Considered CPACE
Being one of the largest CPACE originators in the country, Peachtree has seen a significant increase in pipeline looking to apply proceeds retroactively. Properties are eligible for CPACE up to 3 years after certificate of occupancy in approved municipalities and proceeds can generally be up to 35% of stabilized value. It’s a source of capital that has become more interesting to first mortgage lenders as the proceeds could be used to paydown your first mortgage and size a new interest reserve.
Try to Pay for your Overages and Carry Upfront
We pride ourselves on being lenders who want to be part of the solution when a deal has a budget bust or stabilization is taking longer than anticipated. However, I always encourage borrowers to size up their budget contingencies (i.e., 7% vs. 5%) or structure additional interest reserves. Yes, it will increase your initial capitalization, but your lender will pick up 60-70% of that cost in the loan funding. It may mean more work on the initial capital raise, but it's usually less costly than going back to your lender and/or equity mid-project to get additional capital.
Communication, Honesty and Transparency are Key
Lenders have access to data and information. They ultimately will discover the truth; it might as well come from you. This includes prior credit aberrations or issues and accurate property performance information. We have capital specifically for lending on special situations – there are a lot of deal-level risks that can be mitigated, but lack of trust with sponsorship is not one of them.
In uncertain times, hope for the best but prepare for the worst. Peachtree is an experienced capital partner who understands commercial real estate's nuances. With funding options limited from traditional lenders, our team has the lending solutions, financial capacity, and expertise to close complex transactions in today's challenging capital market environment.
We are available to discuss your lending options that meet your business objectives. Visit us at www.peachtreegroup.com.
Daniel Siegel is president and principal of Peachtree's commercial real estate lending group.
Before joining Peachtree, he was with Ardent Companies as managing director and the head of high-yield investments leading the company’s debt investments. Prior to that, Daniel was vice president of acquisitions at Rialto Capital, overseeing the distressed loan acquisitions platform. During his tenure at Rialto, Daniel directly oversaw the acquisition of commercial real estate loans on domestic and international opportunities. Additionally, he developed the firm’s small balance loan acquisition platform and led the company’s first European acquisition.
Daniel has a bachelor’s degree in finance from Tulane University. Contact him at dsiegel@peachtreegroup.com.
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Peachtree Group originated a $43.0MM recapitalization of the 218-room dual-branded Home2 Suites/Tru Fort Lauderdale Downtown. The floating-rate note carries a 36-month term with two extensions. The sponsor, Driftwood Capital, acquired the site in 2016 and developed the hotels, which opened in November 2020.
The dual-branded hotels (315 NW 1st Avenue) are in Fort Lauderdale's Flagler Village submarket, near key corporate and leisure demand drivers. Fort Lauderdale benefits from strong long-term fundamentals, bolstered by Florida’s position as the nation’s leader in net income migration. Downtown Fort Lauderdale has experienced significant growth, with a 35.4% population increase from 2020 to 2023. The area is home to approximately 200 company headquarters and is well-positioned for the continued return to office, with more than 70% of office workers back—20 percentage points above the national average. Key demand drivers include the Broward County Convention Center, which is expanding to become the nation’s sixth largest, and Port Everglades, one of the world's busiest cruise ports. These factors, combined with the region’s economic resilience, make Fort Lauderdale a compelling market.
With limited new supply and growing demand, Fort Lauderdale's market dynamics favor ADR growth. Expansion of the convention center, increasing cruise port activity, and strong economic fundamentals further support sustained demand.
Read full article on commercialobserver.com
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Commercial Observer: Peachtree Group Lends $59M on San Antonio Hotel Recap
Peachtree Group originated a $59.0MM recapitalization of the 343-room dual-branded AC Hotel and Element San Antonio Riverwalk.
Peachtree Group originated a $59.0MM recapitalization of the 343-room dual-branded AC Hotel and Element San Antonio Riverwalk. The floating-rate note carries a 36-month term with two, 12-month extensions. The sponsors, Winston Hospitality and Concord Hospitality Enterprises, purchased former office towers—Riverview Towers—in December 2019 and spent two and a half years undergoing a multi-phase, adaptive reuse renovation to transform them into dual-branded hotels, which opened in 2022.
Located adjacent to San Antonio's famed Riverwalk, the #1 attraction in Texas, the hotels benefit from the city's strong tourism market, drawing over 39 million visitors annually, and its status as the third-fastest-growing city in the U.S., with a 3.8% population increase from 2020 to 2022. They remain the newest hotels in their competitive set.
The AC Hotel and Element are the first new Marriott-branded hotels in the Riverwalk Historic District since 2011, standing out in a downtown market where extended-stay offerings are predominantly Hilton-branded. As premium Marriott properties, they benefit from access to the Marriott Bonvoy loyalty program, the world's largest travel loyalty program, boasting over 200 million members and growing.
Read Full Article on commercialobserver.com
Commercial Observer: Peachtree Closes $35M C-PACE Construction Loan on South Florida Apartments
Commercial Observer | Starlife Group has secured $35 million of construction financing through Peachtree Group to build a multifamily development in Hollywood, Fla.
This article is republished with permission from Commercial Observer
Commercial Observer (February 4, 2025) - Starlife Group has secured $35 million of construction financing to build a multifamily development in Hollywood, Fla.,Commercial Observer can first report.
Peachtree Group originated the fixed-rate Commercial Property Assessment Clean Energy (C-PACE) loan on the developer’s planned 200-unit 21 Hollywood project.
SF Capital Group’s Matt Shane arranged the transaction, which will be used to support the 13-story project’s energy efficiency, envelope enhancements and hurricane resiliency measures.
Jared Schlosser, Peachtree Group’s senior vice president, said the long-term structure of the deal was an ideal approach for the project amid a high interest rate climate, with Peachtree covering 40 percent of the cost and Starlife Group contributing 60 percent equity. The 30-year loan is non recourse outside of a completion guarantee, according to Schlosser.
“We handled theconstruction draws just like you would on a senior construction loan and wewere even able to fund a little bit of capital at close for the project to getstarted, so it ends up being a pretty accretive alternative compared to justtaking a low-leverage bank loan,” Schlosser told CO.
“It acts like an insurance product where it’s a construction-to-perm deal, but it doesn’t have the traditional rights and remedies and recourse that may come along with traditional long-term financing,” Schlosser added. “Here it’s just a straight annual payment, which is easier to navigate for the borrower.”
Located at 2100 N.Federal Highway, the 21 Hollywood project broke ground late last year and is slated for completion in February 2027. Community amenities will include an infinity pool, a fitness center, outdoor kitchens, co working space and a dog park. The property will also feature 9,997 square feet of ground-floor retail.
Fort Lauderdale-based Starlife purchased the 1.48-acre site across from South Broward High School for $6.5 million in 2023, according to the South Florida Business Journal. The development was designed by Kobi Karp Architecture.
“Conventional construction loans are hard to find these days,” Shane said. “There was significant equity brought into the project, so it made the deal easy to do with PACE.”
Officials at Starlife Group did not immediately return a request for comment.