Phoenix-based structured finance firm, Tower Capital, has arranged over $38 million in hotel loans over the past nine months and is quickly becoming one of the most active financiers in the hospitality sector in the southwestern U.S. It recently closed 869 keys across six properties, which comprised a Holiday Inn & Suites, two Comfort Inns, a Hawthorn Suites, Day’s Inn, and the Hotel Tucson City Center, an independent best known for the international gem show it plays host to annually. The firm has been active in acquisition financing, refinances, and ground-up construction across many different asset classes.
Tower Capital is a boutique structured finance firm specializing in debt and equity placement on behalf of commercial real estate investors throughout the country. It offers borrowers short-term bridge solutions through its in-house private lending platform, as well as conventional financing through its commercial mortgage brokerage division.
First launched last March, the firm has completed close to $100 million in total loan originations, with hospitality representing approximately 41 percent of total production volume.
“We have found that hospitality has been a really underserved sector when it comes to commercial real estate mortgage banking and brokerage, said Adam Finkel, principal of the firm. “There just aren’t that many people focusing on these properties when assets such as multifamily are much easier to finance given the amount of capital chasing those deals through the government sponsored entities like HUD, Fannie Mae, and Freddie Mac. In addition, we are experiencing banks, debt funds, and other lenders becoming full on hotel allocations given the amount of velocity in the marketplace over the past couple of years. The money is still out there if you know where to find it, it’s just getting more expensive.”
The two principals of the firm, Finkel and Kyle McDonough, had been close friends for the past 15 years prior to founding the company. Finkel previously held the position of vice president at Johnson Capital, one of the largest independent commercial banking firms in the country before it was acquired in late 2014. McDonough was the director of a local bridge debt fund that placed private money loans for transitional assets during the Great Recession.
“Tower Capital blends both of our backgrounds together nicely,” McDonough said, “Ultimately our goal is to produce the most cost effective financing terms and structure that will meet our clients’ investment objectives, whether that’s through a bank, CMBS, life insurance company, debt fund, or our own private money platform.”