Investment and management firm grows through acquisition and new construction
Wednesday, June 15, 2016 – PEACHTREE HOTEL GROUP of Atlanta is adding 10 hotels through acquisition and new development – a $183 million investment toward expanding its portfolio of select-service properties nationwide.
Four hotels are under contract for acquisition and are expected to close within the next 60 days. The company also has six additional properties in various stages of development. Peachtree invests in assets in suburban and tertiary markets throughout the U.S. The company’s management arm will operate all 10 hotels.
Peachtree Hotel’s growth strategy includes new properties as well as acquiring hotels in need of a turnaround through new operations or Capex investments. Apparently, there are plenty of the latter available.
“Although the outlook for the hotel industry is positive over the next several years, we’re seeing more motivated owners selling both non-core and assets requiring significant capital reinvestment due to the recent volatility in the capital markets coupled with tightening debt markets,” said Brian Waldman, senior vice president of investments.
“With RevPAR at or near its peak, we continue to be very selective about the opportunities we pursue and target hotels that can benefit from either improved management or are in need of capital investments. This plays well to our strengths as both owners and operators.”
Waldman said Peachtree Hotel Group anticipates an active acquisition market this year with on- and off-market deals. A major wave of brand PIPs are on the horizon and CMBS loans are coming due over the next few years, two factors that drive transactions. “We have considerable ‘dry powder’ to continue to acquire both individual properties and portfolios, as well as for development.”
The four properties under contract for acquisition, representing nearly 600 rooms, include two Hampton Inns (Hilton), an Aloft (Starwood) and a DoubleTree (Hilton) conversion opportunity. Geographically, the investment footprint spans from the Southeast to the Midwest.
The five hotels under development represent nearly 700 rooms across four states and include Marriott, Hilton, InterContinental Hotels Group and Starwood brands.
“Our prolific pipeline is a testament to our platform of aggressive, but prudent, expansion in select-service hotels within secondary and tertiary markets,” said Jatin Desai, chief investment officer. “We continue to seek hotels that can benefit from strategic cash infusions and/or better operating practices, as well as development opportunities in markets with multiple demand generators, limited new supply and a positive business environment.”
“To support our aggressive growth plans, we have added greater depth to our bench on the operations and finance sides,” said Greg Friedman, chief executive officer. “We will continue to scale our platform to provide superior services for our investors, guests and team members as we expand.”
Peachtree Hotel Group operates, develops and invests in premium-branded, select- and limited-service and extended-stay hotel assets under the Marriott, Starwood, Hilton, Hyatt, Choice and InterContinental Hotels Group flags. Since its inception about 10 years ago, Peachtree has acquired, developed or originated more than $965 million of hotel properties and first mortgage notes. Peachtree’s current portfolio comprises 65 hotel assets totaling 6,672 rooms, including 27 real estate assets and 38 notes.