Financing; How hotel lenders view the current debt market

July 30, 2019

A panel of hotel lenders at the 2019 ALIS Summer Update in Boston discussed the current lending environment, new construction and the importance of brands and sponsors.

John Farmer, right, of Eastern Bank, talks about the current lending environment on a panel at the 2019 ALIS Summer Update conference in Boston that also included Dilip Petigara of Access Point Financial. (Photo: Bryan Wroten)



BOSTON—Hotel owners and developers on the lookout for the next deal ultimately need a lender to believe the deal will succeed.

Lenders on the “State of the debt market” panel at the 2019 ALIS Summer Update conference in Boston shared their perspective of what’s happening on their side of these deals.

The current environment
Mark Lanspa, EVP of the hospitality finance group at Wells Fargo, said his company handles a lot of acquisitions that involve changing management companies.

“Changing managers is more disruptive than you realize, even today,” he said. “Because of the labor situation, we really focus on that.”

His company also spends a great deal of time understanding how markets will respond to different flags, he said. In one instance, a client switched a Kimpton Hotels & Restaurants property over to a Marriott International brand, he said. It was interesting to see how strong the property performed as a Kimpton while as a Marriott, the property’s performance was choppier, he said.

Dilip Petigara, COO at Access Point Financial, said much of what his company does is focused on the value-add propositions and how the developers and owners are able to execute on those plans. But his company also sees a fair amount of new-build opportunities, he said.

“It’s still about the ability to execute on a plan,” he said.

Looking at the big picture on the credit side, Eastern Bank SVP and senior credit officer John Farmer said his company is already starting to hear from regulators about stress testing tied to concerns about the economy. The Federal Reserve “is flip flopping” on where it wants to be from six months ago, and that’s creating confusion in the market place, he said.

There is some kind of downturn coming, large or small, and it will affect the credit and quality of what his company has for collateral, said Jim O’Shaughnessy, managing director at Barings Real Estate.

“We’re extremely picky about the quality in the market, in terms of the location, and the sponsorship is extremely important,” he said.

New construction
O’Shaughnessy said his company has done some new-construction projects, citing an Edition Hotel in West Hollywood as part of a mixed-use development. It just completed a mezzanine piece for a ground-up project in Central City in Philadelphia, he said.

Though his company is selective in choosing new-construction projects, when it does participate, it’s mainly in large metro areas, likely a central business district location with sponsorship, he said.

Lanspa said Wells Fargo has been active in new construction, which is sponsor- and project-driven and has come in “a lot of flavors.” One recent project was a 50-50 joint-venture project involving a major shopping center owner who partnered with a developer to build a Marriott-branded hotel.

His bank likes recourse a lot, he said, adding that it’s fairly rare not to get recourse. That recourse usually burns off in the performance of the property over three to four years, he said.

Wells Fargo has done some deals with some mezzanine debt behind them, but mezz-debt lenders who provide construction loans are fairly rare, he said. The company views mezz debt as another line of defense, as the mezz-debt providers the bank interacts with are its customers, such as Blackstone and KSL Capital debt funds.

Sponsors and brands
Branding is important for Access Point Financial, Petigara said. The company favors lifestyle and boutique brands and soft-brands affiliated with the largest brand companies because they are attractive to guests and have the benefit of a wide distribution system.

“We like those projects,” he said. “We see a lot more of that. It’s helping the best of both worlds.”

Sponsorship decisions are based on understanding the business plan and seeing the budget and contingency plans, he said.

Private equity comes in many varieties, Farmer said. Private equity investors knoe how to hire the best consultants, which is important when developing a new hotel or turning a property around, he said.

Having a flag for a hotel has lost some value, he said. However, the distribution and power of loyalty programs is attractive. The loyalty programs are a demand driver, especially among road warriors, he said, and loyalty helps fill hotels Monday through Thursday nights.

O’Shaughnessy said his company has worked with independent hotels and some emerging brands. The company’s first emerging brand client was Yotel, and he believes that’s an interesting and compelling brand though it does carry risk.

“In our view, some emerging brands on the microhotel and the hostel space are worth looking at,” he said.

While his company would be interested in Yotel or CitizenM, it would need to learn more about some of the smaller hostel brands before committing to them, he said.

Access Point Financial Appoints New Senior Leadership Team to Accelerate Corporate Growth and Program Expansion

July 15, 2019

Plan A

Recognized leader in hospitality-focused lending announces key appointments, including Dilip Petigara as CEO and Michael Lipson as Chairman of the Board

 ATLANTA – July 15, 2019 – Access Point Financial, LLC (APF), a leading direct lender and specialty finance company focused exclusively on the hospitality industry, today announced two key appointments to its senior leadership team, naming Dilip Petigara as Chief Executive Officer and Michael Lipson as Chairman of the Board of Directors. The appointments were made as part of aggressive new corporate growth initiatives put in place to meet the growing demand for financial services in the global hotel sector.

Since joining Access Point Financial in 2012, Petigara has held the position of Chief Operating Officer for the company. With over 23 years of experience in  the hospitality and finance industries, he previously served as Senior Vice President of Specialty Finance Group, where he managed loan operations, internal credit approvals, closing/funding and asset management. Prior to that, he held the position of Assistant Vice President and Senior Underwriter at GMAC Commercial Mortgage.

“With a highly successful 23-year tenure in hospitality, real estate and financial services, Dilip has exhibited proven financial expertise and leadership abilities that have greatly benefitted the Access Point Financial organization and our clients over the past seven years that he has served as Chief Operating Officer,” said Michael Gontar, Chief Investment Officer for Wafra Capital Partners, APF’s capital partner. “In his new role as CEO, we look forward to entering a dynamic new stage of growth with him at the helm.”

Newly appointed Chairman, Michael Lipson has served as a strategic consultant to Access Point Financial since 2017. As Senior Vice President of Multifamily Asset Management & Operations at mortgage loan company, Freddie Mac, he led the organization’s multifamily business operations, asset management and technology teams. Lipson previously served as President and CEO of Berkadia Commercial Mortgage, and also spent 13 years as Executive Vice President for Capmark Finance (GMAC Commercial Mortgage), where he oversaw hospitality lending and worked alongside Petigara and other members of APF’s senior management team.

“It is an honor to have a financial services industry veteran of Michael Lipson’s caliber heading up the Board for Access Point Financial,” continued Gontar. “Michael has been a thought leader in this space for many years now, and his new role heralds an exciting time not only for APF, but for the hospitality finance industry as a whole. We are poised for exponential growth, and these new leadership appointments are laying the foundation for even greater success, as we expand our portfolio of services to meet the growing industry demand for specialized financial services.”

With a very experienced team that has serviced $7 billion of loan products over the last 30 years, Access Point Financial is viewed as a premier financing source by top-tier franchise hotel corporations who consistently refer their franchisees to APF to help finance the expansion or maintenance of supply needed to further drive market demand. To that end, APF offers asset-based renovation/conversion loans for the repositioning of hotel assets. These loans are tailored to support recurring and mandatory brand mandated upgrades, which are required of franchisees for license agreement renewal, along with projects planned in conjunction with acquisitions and conversions – all of which are designed to facilitate franchise fee revenue growth via new room expansion.

“In order to meet the changing demands of the hotel franchise market, APF will be significantly expanding our portfolio of financial programs, implementing a series of new and exciting programs that have the  ability to be customized to meet the needs of each hotel organization,” said Petigara. “I am honored to have been chosen to lead this exceptional team of hospitality finance professionals and look forward to a new era of growth.”

For more information on Access Point Financial’s comprehensive portfolio of hospitality-focused financial services, Please visit www.accesspointfinancial.com.

About Access Point Financial | Founded in 2011, Atlanta-based Access Point Financial, LLC (APF) is a direct, full-service specialty lender focused on the hospitality industry, offering a full-service lending & advisory platform that provides financing to qualified hotel franchisees of all major brands and independent boutique hotels throughout the United States & Canada. For additional information, please visit www.accesspointfinancial.com.

Media Contact

Catherine Laws
catherine@williammills.com
678.781.7206

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Financing; How hotel lenders view the current debt market

July 30, 2019

A panel of hotel lenders at the 2019 ALIS Summer Update in Boston discussed the current lending environment, new construction and the importance of brands and sponsors.

John Farmer, right, of Eastern Bank, talks about the current lending environment on a panel at the 2019 ALIS Summer Update conference in Boston that also included Dilip Petigara of Access Point Financial. (Photo: Bryan Wroten)



BOSTON—Hotel owners and developers on the lookout for the next deal ultimately need a lender to believe the deal will succeed.

Lenders on the “State of the debt market” panel at the 2019 ALIS Summer Update conference in Boston shared their perspective of what’s happening on their side of these deals.

The current environment
Mark Lanspa, EVP of the hospitality finance group at Wells Fargo, said his company handles a lot of acquisitions that involve changing management companies.

“Changing managers is more disruptive than you realize, even today,” he said. “Because of the labor situation, we really focus on that.”

His company also spends a great deal of time understanding how markets will respond to different flags, he said. In one instance, a client switched a Kimpton Hotels & Restaurants property over to a Marriott International brand, he said. It was interesting to see how strong the property performed as a Kimpton while as a Marriott, the property’s performance was choppier, he said.

Dilip Petigara, COO at Access Point Financial, said much of what his company does is focused on the value-add propositions and how the developers and owners are able to execute on those plans. But his company also sees a fair amount of new-build opportunities, he said.

“It’s still about the ability to execute on a plan,” he said.

Looking at the big picture on the credit side, Eastern Bank SVP and senior credit officer John Farmer said his company is already starting to hear from regulators about stress testing tied to concerns about the economy. The Federal Reserve “is flip flopping” on where it wants to be from six months ago, and that’s creating confusion in the market place, he said.

There is some kind of downturn coming, large or small, and it will affect the credit and quality of what his company has for collateral, said Jim O’Shaughnessy, managing director at Barings Real Estate.

“We’re extremely picky about the quality in the market, in terms of the location, and the sponsorship is extremely important,” he said.

New construction
O’Shaughnessy said his company has done some new-construction projects, citing an Edition Hotel in West Hollywood as part of a mixed-use development. It just completed a mezzanine piece for a ground-up project in Central City in Philadelphia, he said.

Though his company is selective in choosing new-construction projects, when it does participate, it’s mainly in large metro areas, likely a central business district location with sponsorship, he said.

Lanspa said Wells Fargo has been active in new construction, which is sponsor- and project-driven and has come in “a lot of flavors.” One recent project was a 50-50 joint-venture project involving a major shopping center owner who partnered with a developer to build a Marriott-branded hotel.

His bank likes recourse a lot, he said, adding that it’s fairly rare not to get recourse. That recourse usually burns off in the performance of the property over three to four years, he said.

Wells Fargo has done some deals with some mezzanine debt behind them, but mezz-debt lenders who provide construction loans are fairly rare, he said. The company views mezz debt as another line of defense, as the mezz-debt providers the bank interacts with are its customers, such as Blackstone and KSL Capital debt funds.

Sponsors and brands
Branding is important for Access Point Financial, Petigara said. The company favors lifestyle and boutique brands and soft-brands affiliated with the largest brand companies because they are attractive to guests and have the benefit of a wide distribution system.

“We like those projects,” he said. “We see a lot more of that. It’s helping the best of both worlds.”

Sponsorship decisions are based on understanding the business plan and seeing the budget and contingency plans, he said.

Private equity comes in many varieties, Farmer said. Private equity investors knoe how to hire the best consultants, which is important when developing a new hotel or turning a property around, he said.

Having a flag for a hotel has lost some value, he said. However, the distribution and power of loyalty programs is attractive. The loyalty programs are a demand driver, especially among road warriors, he said, and loyalty helps fill hotels Monday through Thursday nights.

O’Shaughnessy said his company has worked with independent hotels and some emerging brands. The company’s first emerging brand client was Yotel, and he believes that’s an interesting and compelling brand though it does carry risk.

“In our view, some emerging brands on the microhotel and the hostel space are worth looking at,” he said.

While his company would be interested in Yotel or CitizenM, it would need to learn more about some of the smaller hostel brands before committing to them, he said.