|
hotels aren’ t like any other commercial asset class, where rates can be reset daily and occupancy and sales are so tied to consumer discretionary spend and corporate travel.
“ Hotels are operationally intensive and subject to seasonality, demand volatility and CapEx requirements,” Morrow said.“ Traditional lenders struggle to underwrite these risks.”
Walker & Dunlop has arranged private credit across senior, stretch senior and structured capital solutions for hotel acquisitions, refinancings and recapitalizations, including, in January, the $ 112-million refinancing of Ace Hotel Brooklyn, where, as Morrow put it, speed, structure and underwriting to a transitional business plan were critical.
Peachtree Group, a direct lender, deployed $ 3 billion in credit transactions across an array of asset classes in 2025, representing an 86.8 % increase from 2024. It entered private credit in 2010.“ With banks pulling back and refinancing risk rising across the market, demand for experienced private lenders has accelerated,” said Daniel Siegel, president and principal, CRE at Peachtree Group.
A few examples of its work include a $ 130-million construction loan for the VOCE Hotel & Residences in Nashville; a $ 72.5-million bridge loan for the 346-room Westin Atlanta Gwinnett; and a $ 53-million refinancing for the 203-room The Morrow Washington DC, Curio Collection by Hilton.
|
Peachtree manages multiple vehicles. One of those targets debt opportunities, explained Jared Schlosser, who is head of credit originations and commercial PACE at Peachtree Group. Hotels are a space Peachtree knows: It launched in 2007 as a family office to invest in premium-branded, selectservice hotels.“ Our original thesis was,‘ We know hotels, where we’ re comfortable being 100 cents, which is the equity. Why not be 70 cents, which is the debt?’” Schlosser said.
In 2023, the U. S. banking sector experienced its largest tumult since 2008 driven by high-volume bank runs in quick succession at several regional banks. These collapses were largely triggered by unrealized losses from rising interest rates and high uninsured deposit levels. The upshot was banks pulling back in their lending activity. It presented an opportunity for groups like Peachtree, which had been raising equity vehicles. Interest rates were high, cap rates were high,“ We can’ t put those dollars into equity deals,” Schlosser said.
Private credit up to that time had been the smaller percentage of the pie chart of debt, which, for the hotel industry, was overshadowed by CMBS and traditional bank loans.“ Private credit is going to be massively bigger than it was in 2023,” Schlosser said.
RISING UP JLL is no stranger to the debt markets. It’ s one of the largest commercial real estate brokerages in the world. Kevin
|
Davis, Americas CEO for the hotels and hospitality division, displays tennis paraphernalia in his office as a subtle reminder or messaging to clients. JLL wants to hold serve.“ We want to sell an asset to you. We expect to finance it for you. We expect to sell it for you,“ Davis said.
The private-credit space, he and others argue, became more ubiquitous after the Great Financial Crisis. Until then, CMBS dominated the landscape, but that primacy came to a halt post-GFC as lenders, saddled with bad debt, winded down and segued into sell-off mode.
“ A lot of those guys never got back into the market,” Davis said, allowing for a gap in the financing markets that began to be filled by private credit.
Traditionally, a large portion of commercial real estate debt was originated and held by banks.“ Following the Great Recession, banking institutions largely withdrew,” said Alex Horn, managing partner and founder of BridgeInvest. With less capital being allocated toward real estate, a gap emerged.“ This presented an opportunity for debt funds to step in and capture deal flow,” he added.
The GFC was hard; COVID was existential. Overnight, hotels went to zero occupancy and zero cash flow— covering debt service became impractical. Hotels were arguably hit harder by COVID than any other asset class. In December 2020, the overall CMBS lodging delinquency rate soared to a staggering 19.8 %, compared to just 1.5 % at the
|
end of 2019, according to Trepp. Past headwinds have showed how financing from traditional platforms and banks can prove challenging, making room for optionality.“ The flexibility of the private-lending platform can pose a meaningful solution to hotel owners and investors facing distressed situations,” Horn said.
ON STRUCTURE One of the big distinctions between private credit and CMBS is that while most CMBS lenders are cash-flow lenders, private credit is generally willing to underwrite more transitional loans that
“[ PRIVATE CREDIT ] CARVED OUT A NICHE RELATIVE TO THE CMBS LENDERS RELATIVE TO THE BANK LENDERS AND RELATIVE TO THE LIFE COMPANY LENDERS
– KEVIN DAVIS, CEO JLL HOTELS
& HOSPITALITY, AMERICAS
|
May / June 2026 hotelsmag. com 23 |