ATLANTA-(BUSINESS WIRE)–Stonehill, a direct commercial real estate lender, has completed $1.2 billion in 2022 investments through Commercial Real Estate Appreciated Clean Energy (“CPACE”) lending and financing, primarily in the hospitality and retail, with $813 million and $163 million in completed investments, respectively. The remaining $269 million was spread across the industrial, land, mixed-use, multifamily, office and senior housing sectors.
“Economic volatility combined with uncertainty around interest rates has significantly reduced the overall availability of funding with capital providers. However, Stonehill not requiring capital markets execution has allowed it to remain active and fill the gap in loan supply,” said Matt Crosway, Stonehill’s president and principal.
The company expects to close $300 million in investments in the first quarter of 2023 and a total of $1.5 billion in 2023.
Stonehill, an affiliate of the Peachtree Group, is one of the most active commercial real estate lenders in the US, ranked as the tenth largest hotel lender in the US by the Mortgage Bankers Association. In May 2022, Stonehill expanded its commercial lending business to originate and make investments in all sectors of real estate through the formation of Stonehill CRE, with Daniel Siegel as its president. This CRE group focuses on heavy transit assets and sectors of the credit market that are traditionally undersupplied.
“We’ve spent years working on our capital formation specifically so we can be proactive and grab market share during periods of economic uncertainty,” Crosway said. “Also, by building out our CPACE division in 2019, which completed $235 million of CPACE financing for the year, and now with Stonehill CRE, we are better positioned to provide lending solutions to many of the current inefficiencies of the market.”
Demand for fixed rate financing has increased significantly over the past 12 months and represents a significant part of Stonehill’s portfolio.
“Borrowers generally would prefer a longer lock-in period if it comes with interest rate certainty, and that’s an option and flexibility we’re happy to provide,” Crosway noted.
Many experts predict a recession, with few predicting a prolonged period. The current Secured Overnight Funding Rate (SOFR) curve, a broad measure of the cost of borrowing, projects declining rates through the end of the year and rates starting to normalize in 18-24 months. Short-term disruptions and uncertainty will not prevent Stonehill from investing in the market and providing credit for the right deals.
“The majority of the transactions we finance have some capital or management improvements that need to be made during the term to be competitive with their general peer group, so the value is derived more from the execution of a business plan, than from estimating value based on market stability,” said Jared Schlosser, Stonehill senior vice president and head of Stonehill PACE.
About Stonehill
Stonehill, a direct lender, actively provides permanent loans, bridge loans, mezzanine loans and preferred equity investments secured primarily by hotel assets. Founded in 2013, Stonehill provides creative financial solutions for acquisitions, recapitalizations, refinancings and renovations. Stonehill’s principals have come together to originate, structure or purchase more than $10.0 billion in debt, and since closing its first fund in 2014, Stonehill has completed more than 380 transactions totaling more than $4.0 billion. For further information please visit www.stonehillsc.com.
About Peachtree Group
Peachtree is a private equity investment, asset management and fund firm that focuses on opportunistically deploying capital across its distinct operating and real estate divisions, including hospitality, commercial real estate lending, residential development, capital markets and media. . Since its founding in 2008, the company has made hundreds of real estate investments valued at more than $8.1 billion in total market capitalization and currently has more than $2.3 billion of equity capital under management. For more information, visit www.peachtreegroup.com.