Investment management company Peachtree Group has launched the $250m Special Situations Fund, aimed at capitalising on undervalued hotel and commercial real estate assets.
The fund's strategy is to target properties whose market mispricing is driven by current capital market illiquidity rather than their fundamental value.
The timing of the fund's launch coincides with the approaching maturity of nearly $1tn in commercial real estate loans in 2025 and the hotel sector facing significant refinancing and capital improvement challenges.
Peachtree managing principal and CEO Greg Friedman said: “This fund is about capitalising on dislocation, not chaos.
“We’re targeting high-quality assets not distressed by systematic factors but by capital structure, and we’re doing it with the speed, creativity and certainty of execution that have defined Peachtree’s reputation for more than a decade.”
As traditional funding sources become more cautious, Peachtree said its fund is set to provide an alternative source of capital.
The company explains that owners who secured financing for their properties during periods of low interest rates are now encountering difficulties due to sustained high rates and a tightening liquidity environment.
To address these issues, Peachtree's approach involves offering capital solutions that protect against downside risk, enabling asset repositioning and the realisation of inherent value.
Friedman added: “We believe the next 12 to 18 months offer some of the most compelling risk-adjusted opportunities we’ve seen since the global financial crisis.
“As balance sheet stress and refinancing hurdles intensify in the hotel space and other commercial real estate sectors, Peachtree is uniquely positioned to deploy capital where it’s needed most, delivering attractive returns while providing real solutions for sponsors and lenders alike.”
Some of the Special Situations Fund’s strategies include acquiring off-market, underperforming hotels and other select sectors, providing hybrid and preferred equity solutions, and purchasing distressed properties from lenders.
The company said its established network with financial institutions and stakeholders facilitates early access to high-value deals.
Friedman said: “We’re the first call when a sponsor or lender needs a fast, reliable solution.
“Speed and surety of close are critical in this environment, especially when dealing with complex capital stacks and distressed notes.”
The fund is set to have a nationwide reach, with expectations of significant activity in US states such as Texas, Florida, and California.
Peachtree anticipates the initial closing of the fund within the next two to three months and aims to complete the final close within 18 months from the first.
Earlier in the year, Peachtree Group marked an achievement by surpassing $2bn in hotel developments, broadening its portfolio to 48 properties across the US.
