Property Details
Asset Profile
Multiple

Driftwood Mezzanine Debt Portfolio, LP

D.C., NC, CA, CO & OR

Hospitality Fund
Driftwood Capital Coral Gables, FL
Driftwood Capital
  • IRR 11.6%
  • Equity Multiple 1.21x
  • Hold Period 2.5Y
  • Minimum Investment $50K
  • Year 1 Cash on Cash 11.1%
  • Stabilized Cash on Cash 11.1% Y1
  • First Distribution Nov 2022
  • Distribution Frequency Quarterly
  • Co-Investment 15.21% ($7.18M)
  • Preferred Return N/A
  • Investor Profit Share See Financials
  • Asset Profile Multiple
  • Loan-to-Value See Note
  • Current Occupancy N/R

About this Fund

"Diversified investment in US commercial real estate-backed mezzanine debt. Portfolio comprised of five existing mezzanine loans secured by the ownership of nine institutional-quality hospitality assets. Portfolio is cash-flowing, with quarterly distributions, and is expected to yield a 11.6% IRR"

-Marta Drozd, Driftwood Capital

Fund Type Hospitality Debt
Investment Timing Capital called upon close
Market(s) Washington D.C, North Carolina
California, Colorado & Oregon
Target Fund Size $40MM
Date Opened for Investments July 2022
Amount Raised $6MM
Amount Deployed N/A(1)
Est. Time to Next Investment N/A
Est. Time to Initial Distribution Q3 2022
(1) The total fund amount has been fully funded by Driftwood Lending Partners, LP; up to 90% is available for co-investment

Top Questions

All answers are provided by the sponsor, Driftwood Capital, or its representatives.

 

What is your investment strategy/business plan for the Fund?

Marta Drozd, Driftwood Capital: "Driftwood Mezzanine Debt Portfolio, LP is a unique opportunity to earn 11.6% annual current yield from a diversified portfolio of five mezzanine debt positions secured by the ownership of nine institutional-quality hospitality assets."

Why Mezzanine Financing?

"Specialized asset classes such as hospitality pose a challenge for traditional lenders, who may be sitting on the sidelines or capped at historically low proceeds levels due to uncertainty in the industry and the greater capital markets. This gap in the capital stack (20-30%) presents an opportunity for debt funds and non-traditional lenders to provide attractively priced, risk-adjusted loans that enable a borrower to reach a desired level of leverage while producing an attractive yield for the mezzanine lender."

What is Mezzanine debt?

"Mezzanine debt typically serves as a bridge between a project’s senior loan and the equity within a capital stack. The mezzanine debt position is subordinate to the senior loan and will bear losses ahead of the senior lender, but can fill a gap left by traditional lenders. It can enhance equity returns while being less restrictive relative to senior debt. It is more cost-effective for borrowers, so it is a very attractive way to participate in the capital markets."

"The assets that are securing this portfolio are as follows:

  • Hyatt Place Washington DC/ US Capitol
  • Shashi Hotel Mountain View
  • Home2 Suites by Hilton Charlotte Uptown
  • Hyatt Place Glendale/Los Angeles
  • Hyatt Centric Downtown Portland
  • Hyatt House San Jose Airport
  • Hyatt Place San Jose Airport
  • The Stanley Hotel
  • Fall River Village Resort"

 

What are the most important aspects of the fund for investors?

Marta Drozd, Driftwood Capital:

  • "Diversification of sponsor, brand, geography creates a robust portfolio"
  • "Stable, predictable cash flow and returns"
  • "Short term of roughly 2.5 years remaining"
  • "Immediate distributions starting the quarter after investment"

 

What are the risks and how are you mitigating those risks?

Marta Drozd, Driftwood Capital: "The only real deal risk for a mezzanine lender is that the mezzanine borrowers fails to timely pay its debt obligations. These loans have been structured to include an "interest reserve", meaning that for at least some time there is no doubt that there will be cash available for servicing the debt. Beyond this, Driftwood's lending and asset management teams monitor all underlying hotel performances so that Driftwood may identify potential debt service issues before they manifest. If a hotel is underperforming, Driftwood is proactive in reaching out to the borrower to work through the issues and, utilizing Driftwood’s operating expertise, even provide management guidance to get the asset back on track. While Driftwood Lending Partners has never to date had a mezz loan default, if this were to happen, each of these mezz loans was made alongside an intercreditor agreement negotiated between Driftwood and the senior borrower. In general, Driftwood will have cure rights and other available remedies that will allow Driftwood to foreclose on the ownership of the asset and get the senior debt back current before the senior lender forecloses on the underlying asset." 

 

How has COVID-19 impacted your business plan?

Marta Drozd, Driftwood Capital: One loan in the portfolio (Hyatt Place Washington DC), COVID prompted a discounted payoff (17%) from the sponsor to the prior lender, making the loan's exposure representative of a 53% pre-COVID LTV. All other loans were made during COVID, with underwriting taking into account any potential issues."

All answers are provided by the sponsor, Driftwood Capital, or its representatives.

About this Fund

"Diversified investment in US commercial real estate-backed mezzanine debt. Portfolio comprised of five existing mezzanine loans secured by the ownership of nine institutional-quality hospitality assets. Portfolio is cash-flowing, with quarterly distributions, and is expected to yield a 11.6% IRR"

-Marta Drozd, Driftwood Capital

Fund Type Hospitality Debt
Investment Timing Capital called upon close
Market(s) Washington D.C, North Carolina
California, Colorado & Oregon
Target Fund Size $40MM
Date Opened for Investments July 2022
Amount Raised $6MM
Amount Deployed N/A(1)
Est. Time to Next Investment N/A
Est. Time to Initial Distribution Q3 2022
(1) The total fund amount has been fully funded by Driftwood Lending Partners, LP; up to 90% is available for co-investment

Top Questions

All answers are provided by the sponsor, Driftwood Capital, or its representatives.

 

What is your investment strategy/business plan for the Fund?

Marta Drozd, Driftwood Capital: "Driftwood Mezzanine Debt Portfolio, LP is a unique opportunity to earn 11.6% annual current yield from a diversified portfolio of five mezzanine debt positions secured by the ownership of nine institutional-quality hospitality assets."

Why Mezzanine Financing?

"Specialized asset classes such as hospitality pose a challenge for traditional lenders, who may be sitting on the sidelines or capped at historically low proceeds levels due to uncertainty in the industry and the greater capital markets. This gap in the capital stack (20-30%) presents an opportunity for debt funds and non-traditional lenders to provide attractively priced, risk-adjusted loans that enable a borrower to reach a desired level of leverage while producing an attractive yield for the mezzanine lender."

What is Mezzanine debt?

"Mezzanine debt typically serves as a bridge between a project’s senior loan and the equity within a capital stack. The mezzanine debt position is subordinate to the senior loan and will bear losses ahead of the senior lender, but can fill a gap left by traditional lenders. It can enhance equity returns while being less restrictive relative to senior debt. It is more cost-effective for borrowers, so it is a very attractive way to participate in the capital markets."

"The assets that are securing this portfolio are as follows:

  • Hyatt Place Washington DC/ US Capitol
  • Shashi Hotel Mountain View
  • Home2 Suites by Hilton Charlotte Uptown
  • Hyatt Place Glendale/Los Angeles
  • Hyatt Centric Downtown Portland
  • Hyatt House San Jose Airport
  • Hyatt Place San Jose Airport
  • The Stanley Hotel
  • Fall River Village Resort"

 

What are the most important aspects of the fund for investors?

Marta Drozd, Driftwood Capital:

  • "Diversification of sponsor, brand, geography creates a robust portfolio"
  • "Stable, predictable cash flow and returns"
  • "Short term of roughly 2.5 years remaining"
  • "Immediate distributions starting the quarter after investment"

 

What are the risks and how are you mitigating those risks?

Marta Drozd, Driftwood Capital: "The only real deal risk for a mezzanine lender is that the mezzanine borrowers fails to timely pay its debt obligations. These loans have been structured to include an "interest reserve", meaning that for at least some time there is no doubt that there will be cash available for servicing the debt. Beyond this, Driftwood's lending and asset management teams monitor all underlying hotel performances so that Driftwood may identify potential debt service issues before they manifest. If a hotel is underperforming, Driftwood is proactive in reaching out to the borrower to work through the issues and, utilizing Driftwood’s operating expertise, even provide management guidance to get the asset back on track. While Driftwood Lending Partners has never to date had a mezz loan default, if this were to happen, each of these mezz loans was made alongside an intercreditor agreement negotiated between Driftwood and the senior borrower. In general, Driftwood will have cure rights and other available remedies that will allow Driftwood to foreclose on the ownership of the asset and get the senior debt back current before the senior lender forecloses on the underlying asset." 

 

How has COVID-19 impacted your business plan?

Marta Drozd, Driftwood Capital: One loan in the portfolio (Hyatt Place Washington DC), COVID prompted a discounted payoff (17%) from the sponsor to the prior lender, making the loan's exposure representative of a 53% pre-COVID LTV. All other loans were made during COVID, with underwriting taking into account any potential issues."

All answers are provided by the sponsor, Driftwood Capital, or its representatives.

Offered By

Driftwood Capital

Driftwood Capital

Coral Gables, FL

Login or Register to See More Details

Available to Registered Users

  • Get to know the sponsor behind the offering with key information
  • See an overview of their experience and success
  • Understand their investment strategies
  • Easy access to contact the sponsor directly to learn more
Assets Under
Management

Currently
$1.9B 30+ assets
Exited
$741MM 10+ assets
Portfolio LTV
60%  
Historical
Realized Returns

Total IRR
N/R  
Equity Multiple
N/R  
Annual Cash
N/R  
Years Of
Experience

As Principals
30+ years  
In Business
7 years  
Size
45 Staff * Dedicated investor relations
* All information is reported by Driftwood Capital as of 7/29/2022.
Assets Under
Management

Currently
$1.9B 30+ assets
Exited
$741MM 10+ assets
Portfolio LTV
60%  
Historical
Returns

Total IRR
N/R  
Equity Multiple
N/R  
Annual Cash
N/R  
Years Of
Experience

As Principals
30+ years  
In Business
7 years  
Size
45 Staff * Dedicated investor relations
* All information is reported by Driftwood Capital as of 7/29/2022.

Financials

Login or Register to View Financials

Available to Accredited Investors:

  • Get an overview of important financial details to make a smarter investment
  • Analyze the financial pro forma to see how projected returns are distributed over time
  • Review source and uses and other important details
Offering Financial

Sponsor Diligence Report

Login or Register to View Report

Available to Accredited Investors:

  • View principal experience
  • Review background check results
  • Track record verification
Diligence Preview

Location Details

D.C., NC, CA, CO & OR

Marta Drozd, Driftwood Capital: "This portfolio is diversified and comprised in assets in several locations across the country that have unique aspects and demand drivers that drive occupancy."

Documents

Login or Register to View Documents

Available to Accredited Investors:

  • View, download, and print the offering PPM (Private Placement Memorandum)
  • View, download, and print the detailed financial projections
  • Access all of the important documents for this offering in one place
Offering Agreement Documents

Frequently Asked Questions

Below are some of the most frequently asked questions about this offering.

RealCrowd is free for investors. RealCrowd charges a technology access fee to the operating partner for our services. We do not charge investors any upfront fees, ongoing asset management fees or promote/carried interest in the investments.

RealCrowd offerings are open to accredited investors. RealCrowd does not recommend or advise on any offering on our platform. While we have minimum history and experience threshold for sponsors who post on our platform, if you are unable to perform your own due diligence, please consult with an attorney or financial advisor prior to making an investment.

RealCrowd is a marketplace that connects investors with qualified sponsors. We strive for transparency and impartiality. For this reason, we do not participate in any offerings on our site.

Have a Question?

Send Driftwood Capital and/or RealCrowd a message. If you have a question about this offering ask Driftwood Capital. If you have a question about the transaction process or other general inquiry, RealCrowd will be happy to help.

Please resolve the captcha and submit.

We'll get back to you soon!

In the meantime, you can create an account to view detailed information about Driftwood Mezzanine Debt Portfolio, LP.

In the meantime, please review the offering documents and financials.