According to the board of governors of the Federal Reserve System, more than 700,000 establishments closed in the second quarter of 2020, accounting for nearly three million jobs out of 20 million gross job losses occurring in that quarter. Nevertheless, that surge in closures included numerous temporary measures and was followed by a surge in openings in the third quarter that remained elevated through the middle of 2021, the Fed found.
“Call it December 2019,” Friedman began. “We were at record occupancies, record revenue per available room across our portfolio. Obviously, by March 2020, we were at the lowest level of all time within our industry. Occupancies had dropped to near zero across our portfolio.”
It was Peachtree Group’s methodical market selection that saved the day: “Fortunately, because of the markets we invested primarily into, our hotels did rebound a lot quicker than we expected,” Friedman said. “By the summer of 2020, our portfolio of assets – both on the credit side as well as on the equity side – had recovered to a point where they were covering operating costs… by the end of 2020 we were able to cover not only operating costs but debt service. So we were able to, from an asset management perspective, make it through the pandemic pretty unscathed.”
Returning to its earlier playbook, the company also snapped up debt. “But also, on the flip side, we really took advantage of the pandemic,” Friedman said. “We were probably the biggest buyer of debt. We bought over 180 loans secured by different hotel assets across the US. So we were very active in buying debt in 2020 as well as in the first half of 2021.”
The upshot: “We made about 29 rescue capital pipe loans against different hotel assets, and we bought 19 hotel assets as well during that time period,” Friedman said. “So we were able to play offense during the pandemic as well as being successful in playing defense across our portfolio too.”
Source: mpamag.com