Stonehill Strategic Capital, (SSC) an affiliate of Peachtree Hotel Group focused on hotel financing, today announced that it has ramped up its lending platform and plans to deploy approximately $200 million, primarily in mezzanine and bridge loans for hotel assets and development over the next 12 months. The company targets the $1 million to $10 million loan range for mezzanine loans and $3 million to $20 million for bridge financing.
“Hospitality and lodging fundamentals have continued to strengthen, driving a surge in transaction activity," said Mat Crosswy, president of SSC. “However, buyers are facing a shortfall in the capital stack due to banks’ reluctance and conservative nature when underwriting hospitality credits. SSC realizes that every deal is unique and can provide potential borrowers an edge with higher leverage loans coupled with creativity, timeliness and flexibility in their execution, when speed and certainty of close may matter most.
“The majority of bridge and mezzanine lenders today focus on larger transactions and major markets, while community banks continue to shy away from hotel lending, except in their own, limited footprint. This makes it harder for smaller owners and investment groups, especially those in secondary and tertiary markets, to obtain sufficient financing to complete an acquisition or execute a needed renovation. Because of our extensive background in the hotel industry, we are comfortable looking at any type of property/location and responding quickly.”
SSC Principal Jatin Desai said that SSC’s bridge and mezz loans will complete the capital stack up to 85 percent loan-to-value (LTV), with two- to five-year terms. The company offers competitive rates that vary depending on the specifics of the transaction and strength of sponsors. SSC foresees the bulk of its lending going towards acquisitions and refinancings, with some limited new development, preferably in premium brands in the select-service and extended-stay categories throughout the U.S.
“From a financing perspective, we are optimistic that the demand for debt will continue to be robust in 2014 given the on-going normalization of the capital and transaction markets,” Greg Friedman, SSC principal. “Already, we are experiencing strong interest in our mezzanine programs where borrowers are utilizing the funds to complete the capital stack and lock in a historical low senior loan rate. We also are seeing borrowers utilize our bridge programs to execute quickly on value- added-type transactions or transactions that have a short window for execution.”
Since launching in the third quarter of 2013, Stonehill Strategic Capital closed and funded five transactions. In addition to providing loan financing, Stonehill Strategic Capital also purchases first mortgage notes. The company via affiliates purchased eight first mortgage notes in 2013. “As lenders continue to move distressed mortgages off their balance sheets, we expect that this market will remain fertile and that we will acquire as many as 10 to 12 notes over the next 12 to 18 months,” Friedman added.
About Stonehill Strategic Capital
Stonehill Strategic Capital, an affiliate of Peachtree Hotel Group, is primarily focused on funding bridge loans, mezzanine loans and preferred equity investments backed by limited and select service hotel assets. Stonehill Strategic Capital provides creative finance solutions for hospitality projects seeking capital to complete acquisitions, recapitalizations, refinancings, and renovations.
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Chris Daly, media