Peachtree's track record in commercial real estate is impressive. Our team has thrived through three significant economic disruptions. Our senior leaders have been instrumental in that success. Recently we asked those leaders to reflect on their lessons learned and share how that experience has shaped their thought process moving forward.
Here are a few of those insights.
"Building a formidable team is crucial for realizing your vision. Select individuals based on their exceptional skills and expertise and then trust them to excel in their roles. Empowering your team unlocks their full potential, driving extraordinary results and propelling your organization to new heights."
Greg Friedman and Jatin Desai – Managing Principals
“Foresight is critical in the investment process, requiring continuous consideration of macroeconomic conditions alongside local economic factors. This dual analysis enables us to identify nuanced opportunities and manage risks more effectively. By integrating global and regional insights, we can make more informed and strategic decisions, enhancing the potential for the investment's long-term success."
Greg Friedman, Managing Principal and CEO
“Ensure sufficient liquidity to maintain resilience. We have implemented and consistently maintained this approach for our Funds. While it may impact internal rates of return (IRR), it will allow us to endure market volatility and retain assets. Asset values typically rebound if adequate capital is available to weather downturns.”
Jatin Desai, Managing Principal and CFO
“Navigating through development always entails its share of challenges and victories, a reality underscored especially during Covid. While previous downturns primarily revolved around financial aspects, the pandemic introduced disruptions in cost, labor, and material supply chains. Reaching a semblance of normalcy took nearly three years, during which we remained steadfast in risk mitigation across these fronts. Adaptations in processes, timing, procurement strategies, and collaborations with skilled contractors were pivotal in this regard. Despite each disruption, we observed a consistent upward trend in average daily rates, particularly for newer or like-new assets.”
Mitul Patel, Principal
“Anticipate various exit scenarios: While one of our investments succeeded with the SBA refinance strategy, another encountered challenges. Legal issues with the borrower disqualified them from SBA eligibility, leading to loan refinance challenges. In hindsight, we were too dependent on a single exit source and now underwrite deals to ensure there are several (refinance, sale, loan sale) exit options available.”
Michael Harper, President, Hotel Lending
“Constant exposure to various transactions across different levels has enabled us to recognize patterns and anticipate issues during negotiations. This depth of experience has honed our ability to streamline the process, focusing on the crucial issues and avoiding unnecessary distractions. Ultimately, efficiency is paramount.”
Kevin Cadin, General Counsel
“The priority lies in cultivating a pipeline rather than managing individual transactions. The true value lies in the pipeline itself, not the deals outlined in term sheets. This approach grants the freedom to negotiate without the pressure of immediate results. Consequently, I rarely push terms or additional proceeds because I know the depth of additional opportunities and have confidence in the channels that have been developed to continue generating opportunities.”
Daniel Siegel, Principal and President, CRE
“The90% rule. It is often better to make a decision with 90% of the information or90% of what you would ideally like an output to be. That last 10% which is for perfection often leads to analysis paralysis and the opportunity cost of waiting is often greater than the value achieved in getting the last 10%. There is no such thing as perfect.”
Brian Waldman, Chief Investment Officer
Greg Friedman and Mitul Patel form Peachtree Hotel Group as a family office to invest in premium-branded select service hotels.
Peachtree launched complementary divisions to develop and operate hotels, Peachtree Hospitality Development and Peachtree Hospitality Management, respectively. Over the next decade, the company continues to rapidly grow its portfolio of limited- and select-service hotels, becoming one of the nation's fastest-growing hotel acquisition, management, development and ownership groups in premium-branded hotels under the Marriott, Starwood, Hilton, Hyatt, and InterContinental Hotel group flags.
Jatin Desai joins Peachtree as managing principal chief investment officer and chief financial officer. The company expands investment offerings beyond equity investing into credit investments, acquiring debt positions secured by hotel and other real estate assets. As the Great Financial Crisis took hold, Peachtree implemented a distressed investment strategy and invested in 47 distressed hotels.
Peachtree launched Stonehill, a direct commercial real estate lending division, to focus on debt originations and note acquisitions. Stonehill focuses on transitional assets and sectors of the credit market that traditionally have had more limited access to financing, eventually becoming a top 10 U.S. commercial real estate hotel lender as ranked by the Mortgage Bankers Association ("MBA").
Peachtree Group reorganized from a family office to a vertically integrated private equity firm. The company launched its first investment vehicle focused on acquiring and originating debt investments in select-service hotels.
Peachtree launched its first discretionary equity investment vehicle to acquire and develop premium-branded hotels and other commercial real estate assets.
Peachtree launches Revive Land Group, a land development division focused on designing, entitling and developing residential and mixed-use projects. Revive has since transacted on over $50MM of real estate, consisting of over 1,100 residential lots.
Stonehill PACE was established as a direct lender focusing on property assessed clean energy for diverse commercial real estate asset classes. Over time, it evolved into one of the prominent CPACE providers in the U.S., securing over $600 million in CPACE financing. Also, Peachtree initiated a mortgage Real Estate Investment Trust (REIT) specializing in financing income-generating real estate. This REIT's scope involved acquiring or originating mortgages and mortgage-backed securities. The company further expanded its endeavours by investing into hotel development within Qualified Opportunity Zones. This strategic move aimed to leverage the tax deferral benefits offered by the Tax Cuts and Jobs Act of 2017.
Peachtree PC Investors (PPCI), a FINRA-registered broker-dealer, becomes Peachtree's exclusive managing broker-dealer for the firms' investment offerings.
The onset of the pandemic triggered an unexpected "Black Swan" event, plunging the U.S. into a recession and significantly impacting various sectors, notably the commercial real estate industry, particularly in hospitality. In response, Peachtree initiated its most extensive investment initiative to date, focusing on real estate and related assets. This strategic move aimed to capitalize on the emerging opportunities resulting from market disruptions, operational inefficiencies, under-capitalizations, and expected cyclical rebounds. Throughout this period, the firm executed transactions totaling $3 billion in asset value, encompassing debt and equity investments. Notably, Peachtree acquired over 180 first mortgage notes as part of its investment activities, positioning itself within a diverse array of real estate assets.
Continued disruptions caused by the pandemic have led to financial strain among ownership groups and developers due to reduced access to capital. In response, the company introduces its twelfth sponsored investment vehicle, aiming to engage in opportunistic debt and equity investments. This strategic move capitalized on emerging investment opportunities within the hospitality industry and other real estate sectors that have been impacted, too.
Gala Media Capital was launched to finance the production of films and television
Daniel Siegel joins Stonehill as Principal CRE, bringing a team of experienced originators outside the hospitality industry to expand Peachtree's commercial lending business. In addition, Peachtree expands its array of high-quality, diversified investment strategies and vehicles by launching a 1031 Exchange DST program to enhance its tax deferral strategies in the hospitality sector. Due to Peachtree’s expansion into non-hospitality investments across the ecosystem, the company drops “Hotel” from the name and becomes Peachtree Group, continuing to grow beyond hospitality.
$9B+ Asset Value and $2.5B+ Capital Under Management
As the portfolio of commercial real estate investments expanded, Peachtree consolidated all affiliated companies, notably Stonehill, Stonehill PACE, and Peachtree Hospitality Management, under the Peachtree Group umbrella. The firm adds to its vertically integrated management platform with the addition of an EB-5 program to access low-cost capital, diversify its funding sources and invest in job-creating projects across the U.S. Doubling in size since 2020, Peachtree Group has achieved renowned success through investments based on its ability to deploy capital opportunistically through business cycles, taking advantage of its holistic view of the market.
As interest rates continue to increase, banks and other financial institutions are peeling back from commercial real estate lending. But one Atlanta private equity firm is seeing an opportunity — even in the aftermath of the March bank collapses. Over the past 12 months, Peachtree Group has been “aggressive” in lending to groups unable to source debt for projects, CEO Greg Friedman said. The firm is also seeking to buy debt from financial institutions looking to reduce their exposure to commercial real estate.
Many pivotal moments in Greg Friedman's life occurred against the backdrop of major economic shifts. He graduated college right before the dot-com bubble burst, and coincidentally walked away from an internet company he started at the tail-end of the boom. Just after he founded Peachtree Group, the private equity firm he leads, the Great Recession began, and he and his partners had to shift their business model. Friedman knows firsthand the power of pivoting, which he says helped to lead his firm’s success more than 15 years later. Peachtree Group now counts 250 team members across all of its divisions.