Madison Realty Capital and New bonds are joining forces in a new joint venture partnership to originate and purchase hotel loans across the United States, Commercial Observer can first report.
The two companies announced on Monday the launch of madison newbond, an institutional lending platform that will provide senior mortgages, mezzanine loans and preferred stock to hotel owners and developers nationwide. The strategic partnership will begin with an initial lending capacity of approximately $500 million in hopes of expanding its scale as a tool to rejuvenate a sector still recovering from the peak of the COVID-19 pandemic.
Josh Zegen, managing director and co-founder of Madison Realty Capital, said the platform will leverage his company’s existing lending network while leveraging the hospitality industry expertise of Newbond’s co-founders. . Neil Lutra and Vann Avedisian. Before founding Newbond in early 2021, Luthra and Avedisian were directors of a hotel management company high door for 10 years.
“Hotel loans have always been part of what we have done over the last 17 years of our business, but we always knew that aligning ourselves with a group of operational experts like Neil, Vann and their team at Newbond would improve our platform,” says Zegen. “They really understand the nuances of the hospitality industry.”
Zegen added that there are opportunities in the hotel lending space compared to the pre-pandemic period due to the risk premium attached to the sector with the need for more flexible capital due to some distressed transactions.
“It’s a business that we’ve all been considering, and it’s also a good time, we think hospitality is still under capitalized and therefore there are some very exciting opportunities out there,” Zegen said.
Luthra and Avedisian have completed over $15 billion in debt and equity transactions as a team tackling deals in all major property categories with a particular focus on hospitality. Newbond is a vertically integrated real estate private equity firm.
“Due to the COVID pandemic, we see opportunities to deploy significant capital with borrowers who, to date, have just extended outstanding loans, but will need longer-term financing solutions to execute the recovery and longer-term business plans. In addition, we are also seeing some lenders who want to swap their hotel debt positions,” Luthra said. “We have active equity activity and that was a great way to launch the debt platform with a partner in Josh, Brian [Shatz] and the Madison team we trust.
The Madison Newbond platform will serve a wide range of borrowers, from high-end resorts to limited-service hotels. Financing programs will target transition loans and construction loans for development projects in major metropolitan markets.
Madison, a vertically integrated real estate private equity firm, has completed more than $16 billion in financings since its inception in 2004. Some of Madison’s recent notable deals include a $105 million loan to Strong Partners for the acquisition and modernization of Four Seasons Hotel in Miami, He also granted a loan of 210 million dollars to Strong Partner for the construction of the Four Seasons Hotel and Private Residences Fort Lauderdale.
Andrew Coen can be reached at [email protected]