Access Point’s new CEO plans for growth
August 7, 2019
By CJ Arlotta
ATLANTA—Access Point Financial’s recently appointed CEO isn’t wasting any time—and that’s precisely why the company tapped him to lead the way.
“I expressed my interest in the CEO position after its vacancy due to the retirement of our former CEO,” said Dilip Petigara, the company’s new top executive. “Some of us have been together for nearly two decades and I felt that, as one of the principal architects of the business, I wanted the opportunity to continue to guide the business while leading it through our current phase of expansion. I am grateful to have been entrusted with the role and feel energized to be able to continue to serve our various stakeholders in this capacity.”
Prior to his new role, Petigara held the position of COO for the company. He also previously served as SVP of Specialty Finance Group, and as assistant VP and senior underwriter at GMAC Commercial Mortgage.
His 90-day plan is to build out the company’s functional teams and implement technology designed to better serve borrowers and manage Access Point’s loan portfolio proactively.
“We’ve already commenced this process and begun to hire experienced persons…in order to continue to capitalize on our value proposition,” he said. “Part of this will include key hires in senior positions, such as a chief credit officer, general counsel and managing director of business development. We’ll continue to remain an active and engaged sponsor to the various brands and conferences in order to strengthen and deepen those relationships. I plan to build a collaborative group of professionals focused on growing the portfolio, credit quality, product offerings and celebrating each of our contributory strengths to round out the enterprise, to continue to be the premier lender to the industry.”
Access Point has serviced $7 billion of loan projects, but it’s ramping its growth efforts. One reason why the company appointed Petigara as CEO was he’d fit with the company’s “aggressive corporate growth initiatives,” which were designed to keep up with the growing demand for financial services in the global hotel sector, according to the company.
“Our growth initiatives include top-line loan volume growth by continuing to focus on our core loan products and selectively pursuing accretive new-construction projects, but also include establishing and developing our infrastructure to ensure that we are most efficiently using our capital to meet both the market’s demands and needs, as well as those of our investors and constituents,” Petigara said.
The CEO has a view on the lending market that may sound familiar: Things are going well, but stay alert.
“This current cycle of growth has been very long, by historical comparison, but the growth has been deliberate,” he said. “Although we don’t expect to see 8% RevPAR growth because demand and supply have been generally balanced during this cycle, we still predict slightly positive RevPAR gains. When RevPAR is driven largely by ADR gains, owners and operators must manage costs and variable operating expenses in order to maintain margins. Of course, they have to do all of this while facing pressure from the cost of—and general availability of—labor for operating properties and cost of construction materials and goods for hotels being PIP’d or under development.
“Generally speaking, however, I remain cautiously optimistic and focus our credit analyses on the qualitative factors that help drive prospective success: sponsorship strength and experience; ability to execute on the business plan; brand; diversity of demand generators; and location,” he said.
Despite the positive market outlook, challenges remain—especially for lenders with more than one specialization. “As a specialty lender in the hospitality space that is focused on financing brand-mandated PIPs, value-add projects and new-construction loans, our challenges include underwriting credit risk based on a sponsor’s ability to execute on their stated business plan, whether that means renovating and modernizing their hotel in the most efficient manner while minimizing disruptions to the guests, or building the hotel from the ground up on time and under budget,” Petigara said. “This effort requires us to not only perform the required due diligence during the credit decision process, but also to establish and maintain a robust portfolio team to review and monitor these projects.”
His answer to some of the company’s challenges is leveraging technology.
“Over the course of the remainder of the year, I’d like to utilize our technological tools to maximize our internal efficiencies and reporting,” he said. “By doing so, we’ll free our portfolio team to spend more time in the field with our borrowers and observe their progress, while learning their challenges and enhancing our loan product offerings or structures in order to position their hotels and our assets for maximum success. I expect that developing closer relationships with our customers and the brands will help us become more than just a lender, but a valued partner.”
As for Access Point’s future, Petigara already has a plan in place for the next several years. “We have a passionate and dedicated team of professionals and supportive stakeholders all working toward our common goals, and I am energized for our future,” Petigara said. “Over the next few years, I’d like to see a fully built out model focused on process workflow and quality loan assets. With the full development of our infrastructure, I’d like to focus effectively on doubling our balance sheet by offering our customers various financing solutions to meet their every need.” HB
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.
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
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.
From CMBS to refinancing, owners and lenders talk terms
April 8, 2019
By Stephanie Ricca
ATLANTA—With a competitive lending environment, robust debt markets and the attractiveness of hotels as an asset class, the prevailing sentiment is that now is a good time to be in the hotel business.
However, supply creep and labor costs continue to have an impact on hotel financing decisions, according to lenders and owners speaking on the “Hotel financing: The 30,000’ view” panel at the recent Hunter Hotel Conference.
“We are an ops-intensive business, so we look at the labor side, and the availability of labor is front and center for everyone,” said Adi Bhoopathy, principal and EVP of Noble Investment Group. “There are large markets that have already moved up minimum wage, so the key is to find markets that have more than 2% growth. In a lot of markets, you’re already paying about at minimum wage requirements.”
Arvind Bajaj, senior banker with Morgan Stanley, takes a similar approach to lending in the face of growing supply.
“We’re late in the cycle, but you could have said that two years ago. Real estate and hospitality is so location- and market-specific,” he said. “You can have a hot market like Atlanta or Nashville or Denver, and there’s obviously more development taking place. So you want a market that’s strong but not so strong that it brings a ton of new competitors in.”
Bajaj talked about the current strength of the CMBS market for hotels. “Demand for CMBS loans is very steady,” he said. “Now it’s at about an $80 billion-per-year business, and it’s very competitive.”
Compared to balance-sheet loans, CMBS loans can be less flexible, and flexibility can come in handy if owners want to sell or need flexibility on reserves, he said.
Renovation or property-improvement plan lending is another story, speakers said.
“CMBS is not the best for renos, quite frankly,” Bajaj said. “The rule of thumb is that at acquisition you want a max PIP to be 20% of the loan amount. Changing the flag is very difficult. It can be done, but it’s tough to pre-wire the ability to do that.”
Scott Andrews*, managing director for hotel franchise finance at Wells Fargo, spoke about his group’s position as a pure balance sheet lender.
His group at Wells Fargo will finance PIPs associated with a hotel refinancing, and brand-mandated PIPs that come with an acquisition.
Jon Wright, chairman and CEO of direct lender Access Point Financial, said his company will do bifurcation loans for renovations, which break out the land and building costs and “put a high amortization on the CapEx component,” he said.
While cost of capital is higher for a private equity lender like Access Point, Wright said that bifurcation often means the deal is less expensive than traditional mezzanine or bridge financing.
“There’s no shortage of debt capital out there … between CMBS and balance sheet and insurance company (lenders),” Bhoopathy said. “The availability is very much out there; it just depends on your business plan.”
Noble Investment Group developed the ground-up dual-brand Moxy Atlanta Midtown and AC Hotel Atlanta Midtown, which opened in January. (Photo: Marriott International)
Several speakers agreed that with construction lending, it’s important to choose the right bank with terms that work for your company and the project.
Wright said Access Point is growing its construction lending business.
“Ground-up (development) often has far fewer surprises than major renovations or conversions,” he said. “As a lender, we have more control and can follow the budget more than anything else.”
Andrews* said his group at Wells Fargo does not do construction financing, but will selectively look at construction take-out opportunities once the hotel is in operation.
Bhoopathy said Noble worked with regional banks on the ground-up, dual-brand Moxy Atlanta Midtown and AC Hotel Atlanta Midtown, which opened in January right before the city hosted the Super Bowl.
“It was a complicated deal,” he said. “It was a surface parking lot owned by a public parking (real estate investment trust), so we structured a deal where we maintained their cash flow during construction, then we built a (parking) deck and a hotel on top.”
Timing definitely has an impact on construction, particularly when supply is factored in, Bhoopathy said.
“Our view is based on where construction costs have been, and availability of labor and cost creep,” he said. “If you’re not already in the ground now, moving dirt, you’re late in the cycle … and there’s a good number of those (projects) that will get shoved to the next cycle.”
Acquisition vs. refinancing
“There’s a tremendous bias toward acquisition vs. refinancing,” Bajaj said, and many others on the panel agreed.
Bhoopathy said the decision to sell or refinance should remain deal-specific.
“It’s very rare that we contemplate a long-term refi, and we’d likely prefer to sell over refi, if all things are equal,” he said. “But that said, at this point where we are late in the cycle … whatever you do, find yourself the flexibility. There’s available capital out there, and people will match your terms for a good deal.”
* Correction, 29 March 2019: The story has been edited to correct and clarify remarks published in an earlier version of the story attributed to Scott Andrews, managing director for hotel franchise finance at Wells Farg