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Rothschild Realty launches hotel debt REIT

The Five Arrows’ series of funds has launched a private mortgage REIT with Shaner Hotel Group CEO Lance Shaner. The private real estate investment trust will target hotel first mortgages.

The Five Arrows fund series managed by Rothschild Realty has launched a hospitality debt REIT with Lance Shaner, the chief executive officer of one its portfolio investment companies.

Shaner and Five Arrows Realty Securities V are expecting to hold a first close of the private real estate investment trust next week on $36 million. Shaner Growth Fund II has a seven-year life and is expected to buy debt with a face value of up to $200 million.

Shaner told PERE the vehicle will target debt secured by hotels with brands such as the Marriott, Hilton and Intercontinental, and luxury resorts across the US over the next 18 months.

He added the REIT was not targeting “loan-to-own” deals, but performing, income-producing assets. At present, he said hospitality-focused debt was averaging 60 cents to 70 cents on the dollar.

Five Arrows, which is managed by Rothschild Realty, invested $65 million in the State College, Pennsylvania-based Shaner Hotel group in November 2007.

Shaner Growth Fund II will likely hold assets for around five years, Shaner said. The vehicle's board of directors includes Shaner, Rothschild Realty Managers partners Pike Aloian and John McGurk and JB Griffin of Shaner Hotel Group.