Peachtree Capital Launches $250 Million Distressed Hotel Fund

Peachtree Group smells blood in the hotel market.

The Atlanta-based real estate finance firm launched a $250 million fund focused on distressed hospitality assets, with plans to deploy capital across the U.S. over the next 18 months, Bisnow reported.

The Peachtree Special Situations Fund will target hotels and other properties saddled with debt originated in a low-rate era but now struggling to refinance amid high interest rates and tightened liquidity.

“This fund is about capitalizing on dislocation, not chaos,” said CEO Greg Friedman. “We’re targeting high-quality assets not distressed by systematic factors but by capital structure.”

The firm, formerly Peachtree Hotel Group, is sticking close to its roots with this strategy.

Founded 18 years ago, Peachtree has developed more than $2 billion in hotels and now oversees $4 billion in assets under management. The firm has in recent years shifted more toward real estate credit, making it well-positioned to act as either buyer or capital provider for struggling sponsors.

Beyond hospitality, the fund will also consider distressed deals in multifamily, student housing and self-storage, as well as offering preferred and hybrid equity for acquisitions, development and refinancings. Peachtree said it’s prioritizing California, Texas and Florida, markets with strong demand fundamentals but softening pricing.

Nearly $1 trillion in commercial real estate debt across the country is considered potentially troubled, with $582 billion set to mature by 2027, according to Newmark. Hotels are showing signs of deep trouble. More than 10 percent of hotel-backed loans were in special servicing last month, up from 7.3 percent a year ago, according to CMBS data from Trepp.

Peachtree expects its first purchase from the fund within 90 days, with a final acquisition roughly a year and a half out.

Hotel investment sales were down in the Dallas-Fort Worth market in the first quarter, according to Matthews Real Estate Investment Services. Occupancy was just under 70 percent, and revenue per available room was $94.38.

— Judah Duke