Ep. 33: Building a Scaleable Investment Strategy with Greg Friedman, Managing Partner & CEO of Peachtree Group
Mar 19, 2024
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Greg Friedman, CEO of Peachtree Group, discusses his upbringing, building Peachtree, and the evolution of the investment team. Topics include CPACE financing, hospitality industry focus, and investor questions. The conversation highlights Greg's journey in real estate, diversified investment strategies, and market insights in the hospitality sector.
Greg Friedman's childhood exposure to real estate influenced his career in hotel investments.
Peachtree Group's diverse investor base includes high net worth individuals, family offices, and pension funds.
CPACE loans offer innovative funding solutions for energy-efficient real estate projects, attracting non-bank lenders.
Deep dives
Greg Friedman's Real Estate Journey & Background
Greg Friedman, CEO of Peachtree Group, shares insights on his personal connection to real estate, rooted in his family's business history. Growing up around commercial real estate properties owned by his family, including hotel properties, influenced his path towards specializing in capitalizing and financing hotel projects after university. Despite initial aspirations to pursue a medical career, his exposure to real estate since childhood led him to establish Peachtree Group in 2007, marking the start of his successful venture into the real estate industry.
Peachtree Group's Evolution into a Private Equity Firm
Over the years, Peachtree Group has transformed into a vertically integrated private equity firm managing over $2.5 billion in investor capital. While rooted in real estate investments, Peachtree has diversified its portfolio to include film finance and commercial property-assessed clean energy (C-PACE) loans. By identifying market inefficiencies and pursuing scalable investment strategies, the firm has expanded its focus beyond traditional real estate private equity, emphasizing a holistic approach to driving outsized returns.
Investment Strategy and Capitalization at Peachtree Group
Peachtree Group's investment approach involves a diverse mix of institutional and non-institutional investors, encompassing high net worth individuals, family offices, registered investment advisors, endowments, and pension funds. The firm primarily operates through fund series, leveraging a robust pipeline of investment opportunities to drive capital allocation across various strategies. With a corporate team of approximately 300 members and a broader operational team managing over 3,000 hotel employees, Peachtree's organizational structure supports its multifaceted investment activities.
Expanding Horizons: The CPACE Business at Peachtree Group
Peachtree Group's strategic focus on the Commercial Property-Assessed Clean Energy (C-PACE) business has enabled the firm to access innovative capital sources for real estate projects. Offering attractive fixed-rate debt options in the range of approximately 8%, C-PACE loans serve as a valuable funding avenue for energy-efficient new construction endeavors. Emphasizing sustainability and energy efficiency, Peachtree taps into the potential of CPACE financing to provide liquidity and financial support for various commercial real estate developments across different asset classes.
Financing Opportunities in Commercial Real Estate
Non-bank lenders, primarily institutional and private equity groups, are actively involved in providing financing solutions for commercial real estate projects. They offer loans to pay down existing senior loans and provide liquidity for interest reserves. These lenders, with a deep understanding of C-PACE programs and varying state regulations, have a competitive edge in the market. By supporting property owners with capital and managing risks effectively, they contribute to the stability of the marketplace.
Hotel Development and Investment Strategies
In the hospitality sector, the focus lies on developing and acquiring hotels with value-add potential. Leveraging operational platforms and renovation expertise, investors aim to enhance property competitiveness. The development landscape appears promising due to limited financing options and high equity requirements, leading to a drop in development pipelines. New hotel projects are favored for their potential to outperform and attract strong buyer interest, positioning them as lucrative investments in a supply-constrained market.
Since co-founding Peachtree Group in 2007, Greg has successfully overseen investments of approximately $10.0 billion in commercial real estate and various other enterprises.
With over 24 years of experience, he brings extensive credit and equity investing expertise, particularly in hotels and other commercial real estate assets. Greg was formerly senior vice president of business development for Specialty Finance Group, originating more than $2.0 billion of credit transactions. Previously, he was vice president of business development for GMAC Commercial Mortgage Asset-Backed Lending Division. During his six-year tenure, he originated, closed, and funded more than 300 hospitality FF&E financing transactions with an aggregate capital structure exceeding $10.0 billion.