DER
Driftwood contributed a US $ 24.3 million mezzanine loan through its lending fund behind a US $ 114.4 million senior financing package originated by a major life insurance company . The sponsor is using a portion of the proceeds , US $ 6.9 million , toward renovations of the Stanley Hotel in Estes Park , Colorado .
As traditional lenders pull away from the hotel industry , at least for the near term , vertically integrated real estate firm Driftwood Capital is trying to fill that role – often with mezzanine debt . In August , more specifically , Driftwood stepped in to provide a three-year , US $ 44.5 million mezzanine loan with two one-year extension options for the acquisition and refinancing acquisition of 26 hotels ( 3,067 keys ), mostly budget Motel 6 / Studio 6 properties , where Starwood Property Trust was the US $ 226 million senior lender . The sponsor is the second largest economy hotel owner in the U . S ., with an economy and select-service portfolio that now includes 109 hotel assets totaling over 12,000 keys .
Through its lending fund launched in 2020 , Driftwood Lending Partners , Driftwood has participated in more than US $ 690 million of financings for high-quality hotels and sponsors across the country . The fund focuses on providing mezzanine loans and preferred equity for existing hospitality assets , as well as ground-up hotel development projects in the United States .
Of course , Driftwood remains a developer itself and is currently working on the US $ 388 million Westin Cocoa Beach and the US $ 200 million Riverside Wharf / Dream Hotel in Downtown Miami , both in Florida .
Since its inception , Driftwood Capital has transacted on more than US $ 3 billion in hospitality assets , including new ground-up hotel development projects , cashflowing hotels and hotel-backed loans , backed by an international network of more than 1,200 investors .
HOTELS recently spoke to Driftwood Chief Operating Officer Carlos Rodrigues , Jr ., about their move into lending and what he sees ahead in this space .
HOTELS : What is your broader take on the impact of higher interest rates on hotel deals ? Carlos Rodriguez , Jr .: The fight on inflation and higher interest rates are really cooling things off from a transaction standpoint . A lot of lenders just said , ‘ we ’ re not transacting this summer .’ I think there ’ s a little bit more openness now and adjusting to the new reality that is allowing for some loans to take place .
It ’ s a challenging environment for buyers and owners who are looking to figure out what to do after what has been two years of limited transactions and limited development … You ’ re going to have more upcoming maturities , more requirements for PIPs , and we ’ ve seen those costs go up . And banks are not necessarily
Nov / Dec 2022 hotelsmag . com 51