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ATLANTA (June 24, 2024) – With ongoing credit market dislocations, Peachtree Group originated a $40 million retroactive CPACE loan to BLG SAN DIEGO, LLC (BLG) for its recently opened 147-room AC Hotel San Diego Downtown Gaslamp Quarter in Calif. The Commercial Property Assessed Clean Energy (CPACE) financing was amortized over 30 years and required no payment for a year, followed by five years of interest-only payments. Also, the proceeds allowed BLG to pay down its senior loan with California-based Preferred Bank and E. Sun Commercial Bank, Ltd. to under $20 million, there by mitigating the banks’ exposure.
“This innovative capital structure significantly alleviated the immediate financial pressures, enabling the hotel to establish a solid cash flow foundation during its initial years of operation,” said Greg Friedman, Peachtree Group’s managing principal and CEO.
Despite the U.S. hotel industry's strong RevPAR performance, multiple headwinds exacerbate financial stress for owners. These headwinds include the lagging profitability of U.S. hotels, persistently high interest rates and historically high property insurance costs.
“When we opened the AC Hotel San Diego Downtown Gaslamp Quarter in March 2023, there was a sizeable disconnect between hospitality fundamentals, which are strong, particularly in San Diego, while the debt markets were deteriorating meaningfully,” said Brad Honigfeld, founder, chairman and co-CEO of the New Jersey-based Briad Group®.“ The Fed’s tightening process and rising fund rates drove up the cost of debt considerably.”
Hotel and commercial real estate owners face a tough few years as trillions of dollars in debt come due, and refinancing gets harder, compounded by banks' tightened lending standards.
According to JLL Research, by the end of 2024, $5.8 billion worth of U.S. hotel-securitized loans will be due for repayment, requiring full payment, refinancing, extension or sale. However, if these loans were refinanced at current interest rates, most would struggle to generate enough income to cover their debt costs.
In this challenging lending market, Commercial Property Assessed Clean Energy (CPACE) financing has become a vital source of liquidity. This option is growing in importance as owners face impending debt maturities and scarce refinancing opportunities.
CPACE financing has rapidly gained traction in the commercial real estate market, reaching a cumulative $7.2 billion in the U.S. in just over a decade, according to PACENation. This significant milestone underscores the growing acceptance and adoption of CPACE financing as an innovative and effective solution. Peachtree Group, a key player in this market, has demonstrated its commitment to CPACE financing, with over $800 million in CPACE originations.
The AC Hotel San Diego Downtown Gaslamp Quarter is in downtown San Diego's Gaslamp Quarter, known for its restaurants, shops and nightlife.
“Our hotel was benefiting from its location and performing to its original underwriting, but the debt costs were straining cash flows,” Honigfeld said.
Retroactive CPACE funding offers unique advantages for property owners. It operates similarly to normal pre-project funding, with one key difference: 100% of the loan proceeds can be used to reimburse the property owner for costs already incurred. This feature makes retroactive CPACE a valuable resource for property owners seeking better loan terms or improved cash flow for completed projects.
“The financial relief it provides not only ensures the hotel's success but also positions it for long-term stability. By reducing the financial burden in the early years, owners can focus on delivering exceptional guest experiences and achieving operational excellence,” Friedman said.
This strategic approach paves the way for the asset to transition to a more favorable financing market in the future, ensuring its sustained profitability and growth.
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 and grow its investments. For more information, visit www.peachtreegroup.com.
Contact:
Charles Talbert
678-823-7683
ctalbert@peachtreegroup.com
ATLANTA (June 20, 2024) – Peachtree Group (Peachtree) has expanded its financing program to include net lease retail, medical and industrial properties. The program provides up to 100% loan to cost construction financing for these asset classes, effectively addressing a critical gap in the current commercial real estate market.
The commercial real estate market is currently experiencing a void between tenant expansion plans and financing availability. Developers need alternative financing solutions, as banks have pulled back on lending due to exposure and liquidity constraints.
“Peachtree’s comprehensive financing offerings come at a critical time, as the retail vacancy rate in the U.S. reached a historic low of 4.6% in December 2023, while construction starts significantly declined due to increased financing costs and reduced capital availability,” said Daniel Siegal, Peachtree’s principal and president, CRE.
Net lease financing requires a tenant to pay base rent along with property taxes, insurance, and maintenance costs. This long-term and stable arrangement makes it highly suitable for financing new construction projects. Triple net leases, in particular, enhance this method's value in commercial real estate. By securing lease commitments from creditworthy tenants, developers can leverage stable income streams to secure favorable financing terms.
Net Lease Program Highlights:
Terms:
“As a nationwide balance-sheet lender, Peachtree Group offers competitive terms, in-house loan servicing, and flexible capital to handle a wide array of projects. Our net lease financing is designed to provide the flexibility and support needed for successful project execution, no matter how complex the deal,” said Siegel.
Through various programs, Peachtree provides full-stack debt capital solutions to qualified commercial real estate owners across all sectors throughout the U.S.
For more information about Peachtree Group’s Triple Net Lease financing and how it can benefit your business, please visit our website at www.peachtreegroup.com/credit.
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 and grow its investments. For more information, visit www.peachtreegroup.com.
Contact:
Charles Talbert
678-823-7683
ctalbert@peachtreegroup.com
ATLANTA (June 3, 2024) – Peachtree Group (Peachtree), a prominent private equity firm, debuted its financed film, "The Surfer,” starring Nicholas Cage, at the prestigious Cannes Film Festival.
This successful premiere at Cannes is just one highlight in a series of achievements by Peachtree and its film financing division, Peachtree Media Partners. The firm already has financed nearly a dozen films, cementing its reputation as a growing alternative to conventional television and movie financing.
Peachtree leverages its deep financial expertise and a proven track record of more than $10 billion in investments to excel in uncovering niche and non-traditional opportunities where risk is mispriced to its advantage, driving outsized returns on its investments. The firm applies this strategic insight to transform the financing landscape for television and film productions, generating significant value.
"Our increased activity in movie and television financing represents a natural progression of our capabilities and interests," said Greg Friedman, managing principal and CEO of Peachtree. "We recognize the unique challenges and opportunities within the entertainment industry, especially in an era where content creation is rapidly evolving. We aim to support producers and creators with tailored financial solutions that align with their vision and project needs."
This strategic expansion taps into the growing demand for alternative financing within the dynamic entertainment sector. It specifically addresses the needs of productions ranging from $5 million to $50 million, which are adapting to rapid changes and an increasing number of productions seeking flexible funding options.
As streaming giants like Netflix, Amazon Prime Video, Disney+ and others continue to pour billions into original content to captivate and retain subscribers, they are reshaping the entire financing landscape.
"Peachtree's initiative is poised to capitalize on these industry shifts, offering innovative financial structures that align with the needs of modern content creators," Friedman said. "Having an industry veteran, Joshua Harris, leading Peachtree Media Partners provides the expertise to structure the financing appropriately while mitigating downside risks."
Peachtree's risk management strategy in entertainment financing includes detailed evaluations of each project's commercial potential, the presence of A-list talent, the production team's track record and collateral such as tax credits and pre-sale agreements. The firm also implements safeguards like completion bonds to ensure that projects are completed within budget and on schedule.
"We are excited to provide a platform that not only fuels the creative economy but also aligns with our investment strategies, providing our stakeholders with diverse opportunities in the burgeoning entertainment sector," added Joshua Harris, managing partner of Peachtree Media Partners. "Furthermore, Peachtree's vertical integration allows us to go beyond capital investments in debt and equity by developing the infrastructure needed to originate, underwrite, manage assets and operate as appropriate."
Peachtree has fully transitioned into film and television financing, actively collaborating with filmmakers and production companies on upcoming projects, with 20-plus opportunities currently in its pipeline. In 2024, additional Peachtree-financed movies slated to be released alongside “The Surfer,” include “The Fabulous Four,” starring Bette Midler and Susan Sarandon, “Not Without Hope,” featuring Zachary Levy and Josh Duhamel and “In the Grey,” directed by Guy Ritchie.
The ongoing digital transformation, the proliferation of high-quality content production and changes in consumer viewing habits suggest that the movie and film financing market will remain dynamic and potentially lucrative for the foreseeable future.
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 and grow its investments. For more information, visit www.peachtreegroup.com.
Contact:
Charles Talbert
678-823-7683
ctalbert@peachtreegroup.com
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ATLANTA (May 28, 2024) – Peachtree Group ("Peachtree") has received its I-956F approval from the United States Citizenship and Immigration Services ("USCIS"), the government agency that oversees the EB-5 Immigrant Investor Program, for the development of a Home2 Suites by Hilton in Boone, N.C.
USCIS adjudicated the I-956F petition for the hotel development in just five months.
"It is a testament to the due diligence of the Peachtree team that it was able to get the project approved so quickly, especially when the published processing time is over 15 months," said Adam Greene, EVP EB-5 for Peachtree Group.
Peachtree originated $21.7 million of fixed-rate construction financing over a five-year term for Narsi Properties to develop a 105-room Home2 Suites by Hilton near downtown Boone. This historic town, situated in the vibrant mountains of western North Carolina, is close to Appalachian State University, its 22,000-plus students and faculty, and numerous other demand generators including three of the most popular ski resorts in the state. The hotel is expected to be completed by Fall 2024.
"Construction is underway, demonstrating tangible progress and reducing initial project risks. Importantly, even as we raise EB-5 capital, Peachtree has bridged the loan, offering certainty of execution for the project and is maintaining an equity stake aligned with the same risk level as our EB-5 investors. This commitment ensures our interests are directly tied to the project's success, reassuring all stakeholders," said Greene.
The EB-5 visa program provides the opportunity for foreign investors to potentially obtain a green card in exchange for making a significant investment in a new commercial enterprise that creates jobs in the U.S. Under the program, foreign nationals who invest a minimum of $800,000 in a U.S.-based project that creates or preserves at least ten full-time jobs for U.S. workers are eligible to apply for permanent residency in the U.S.
"Peachtree Group launched its EB-5 program last year to provide an important financing tool that enables us to continue funding job-creating projects across the country," said Greg Friedman, Peachtree's CEO and managing principal. "This hotel development is expected to create roughly 328 jobs."
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 and grow its investments. For more information, visit www.peachtreegroup.com.
Contact:
Charles Talbert
678-823-7683
ctalbert@peachtreegroup.com