Dive Brief:
- Peachtree Group launched a $250 million fund designed to capitalize on hotel market dislocation, the Atlanta-based commercial real estate investment firm announced Monday.
- The Peachtree Special Situations Fund was created for “high-quality” hotel and other commercial real estate assets, some of which are mispriced “due to today’s capital market illiquidity rather than underlying fundamentals,” the company shared.
- Peachtree Managing Principal and CEO Greg Friedman said the investment firm believes the next 12 to 18 months “offer some of the most compelling risk-adjusted opportunities we’ve seen since the global financial crisis.”
Dive Insight:
Nearly $1 trillion in commercial real estate loans will mature this year, and hotels will bear some of the largest refinancing and capital expenditure burdens, according to Peachtree. But as rates remain elevated, and liquidity tightens, the Peachtree Special Situations Fund is designed to “step in where traditional capital has pulled back,” per the company.
Last year, JLL projected that more hotel owners would sell than refinance as their loan maturity neared.
“This fund is about capitalizing on dislocation, not chaos,” Friedman said in a statement. “We’re targeting high-quality assets not distressed by systematic factors but by capital structure.”
The fund will seek off-market acquisitions, such as underperforming hotels; preferred and hybrid equity, such as providing flexible capital to sponsors that need liquidity for acquisitions; and distressed purchases from lenders, often at discounts to outstanding loan balances.
Peachtree said it will tap into its longstanding relationships with community and regional banks to source opportunities before they reach the broader market.
The fund is seeking opportunities nationwide, though Peachtree noted that it expects “significant” deal flow in markets with strong demand fundamentals and recent pricing resets such as Texas, Florida and California.
As of last October, Peachtree’s hotel credit transactions were up 176% year over year.
As part of last year’s Lodging Conference, Friedman said the hospitality industry could expect to see markets where regulatory challenges aren’t present thrive over the next several years.
