Peachtree Group has provided a $150 million bridge loan to Doradus Partners to refinance four hotels near Walt Disney World Resort.
This is Atlanta-based Peachtree’s largest senior bridge loan to date, according to a news release. The new loan replaces existing debt on the portfolio in Winter Garden, Florida, and it is the investment management firm’s fourth transaction with Doradus.
The four properties in the refinanced portfolio are a 223-room Residence Inn by Marriott, a 273-room Fairfield by Marriott Inn & Suites, a 272-room Home2 Suites by Hilton and a 229-room Homewood Suites by Hilton. The hotels were developed in 2020 and 2021, making them among the newest in their competitive set. They have a weighted average occupancy of nearly 89%.
The four hotels are located in Flamingo Crossings Town Center, a mixed-use district that includes hotels, restaurants, retail and entertainment. The area is adjacent to Flamingo Crossings Village, a 120-acre residential community with more than 2,500 apartments used to house Disney cast members and participants in the Disney College Program.
"This transaction reflects exactly where we believe the market is today," said Jared Schlosser, head of originations and CPACE at Peachtree, in the news release. “High-quality assets with experienced sponsorship continue to attract significant lender interest, but execution remains the differentiator.”
In terms of both the real estate and operations, the 997-key hotel portfolio checked every box, he said. They are high-quality, institutional properties with strong cash flow, modern construction and are part of Marriott International’s and Hilton’s distribution systems.
“That combination gave us confidence in the long-term performance of the portfolio,” he said.
In a recent podcast interview with CoStar News Hotels, Peachtree Managing Principal and CEO Greg Friedman said many in the hotel industry expected interest rates to stabilize at a lower level than they have, and that has affected asset valuations materially.
"People have started to capitulate and realize that we are just in this environment where long-term rates will stay higher," he said.
Properties that have great in-place cash flows generally have no problems when it’s time to refinance debt, he said.
"It's when they lack the cash flows and the asset performance isn't fully recalibrated to this new interest rate environment where they're starting to have struggles because the asset values dropped and in a lot of cases they need to bring in additional liquidity."