In response to the changing trends in the hotel industry, Shaner Hotel Group (SHG), based in State College, Penn., along with Almanac Realty Securities VI, an investment vehicle managed by New York-based Almanac Realty Investors, announced the launch of a new REIT that will provide midscale hotel owners and operators with financing for equity and debt needs.
Shaner Hospitality Finance will be the third financing vehicle for SHG. Its Growth Fund I and Growth Fund II—which were active between 2008 and 2012—bought up approximately $190 million in hotel mortgages. But with the market coming back and transactions on the rise, the company has adjusted its investment strategy to offer a different product.
“It’s an active market out there,” says Plato Ghinos, president of Shaner Hotels. “We feel like demand is there. There has been an uptick in transactions, but closings are taking longer. Hopefully we can speed up some of those closings by bringing in our capital.”
Ghinos explains that despite the positive transaction trends, hotel financing is still difficult to come by. Traditional lending institutions may only offer 60 to 65 percent in funding, and Ghinos says that Shaner Hospitality Finance could make up the difference to help projects and transactions get approved. “We’re not bankers or Wall Street investors. We’re not lending money to shopping centers or apartments,” says Ghinos. “We are hotel operators and developers and we know what is happening in the market so we are taking a whole different approach.”
Shaner Hospitality Finance will focus primarily on small to mid-sized hotel companies that carry a premium, full-service or select-service flag. This leverages the company’s strength as an owner and operator of midscale and upscale hotels. Owners that need help refinancing, purchasing existing loans and preferred equity infusions for acquisitions, and funding property improvements will benefit from the fund’s capital. The range is between $3 million and $50 million per project and is available for both individual properties and portfolios.
“We don’t want to limit ourselves,” says Ghinos. “It could be a big deal or a small deal. We are looking at quality projects and quality owners. We will evaluate the brand and the market.”
The newly formed REIT is expecting to place the $100 million initial capitalization within 12 months.
