Stonehill Strategic Capital, a lending division within Peachtree Hotel Group, has provided TPI Hospitality with $104 million in construction debt for it to build out its long-planned Margaritaville Resort in Fort Myers Beach, Fla., Commercial Observer has learned.
The loan, which carries a 42-month initial term, with two extensions, will help fund about 70 percent of the cost of the sprawling development, which will be housed on seven acres on the northern end of Fort Myers Beach, off Estero Boulevard.
After a roughly eight-year marathon fraught with zoning hurdles, lawsuits, and a pandemic that shut down the hotel sector and created an economic downturn, TPI is finally starting to see the light at the end of the tunnel for its 254-key resort project.
“[This development] wasn’t anything spontaneous,” said TPI’s Tom Torgerson, who once served as the firm’s chief executive and has been a part of the years-long progression of the planned development. “I don’t know anywhere else other than maybe coastal California where it can take years from vision to opening. We all knew we had something great here. It was a challenge, but we feel the reward at the end of the day will pay off. It’s been a double marathon, for sure.”
TPI officially broke ground on the project last month and currently has another 23 months left on its construction timeline, according to the firm; it’s targeting a late summer 2023 opening.
“We got handed the pandemic, and that led to almost a complete shutdown of financial markets for new construction hospitality,” Torgerson said. “So, we were initially planning to go [with a conventional bank] but had to go with someone like Stonehill, who could get more creative.”
The financing from Stonehill was just another step along its campaign to help fill the void that currently exists in the market for hospitality construction debt. Most recently, the lender originated a $28 million loan to fund construction on a 167-key, all-suite Marriott SpringHill Suites hotel in Tampa.
“It’s still a challenged space,” said Stonehill President Mat Crosswy. “Regional banks that typically provide a lot of capital [for hotel construction] are not trying to expand their exposure, so the space has been open, outside of debt funds. It’s a good opportunity to go in and provide capital in a space with a void right now. We’ll continue to make a push there.”
TPI’s Margaritaville Resort Fort Myers Beach will sport a sprawling mix of two key club and lounge spaces and six food and beverage offerings, which will be geared toward not only guests of the resort but locals and tourists. The firm is projecting that about half of the activity at the food and beverage outlets will be locally driven and around half of its revenues will come from non-lodging aspects of the project, according to TPI CEO Bill Upshaw and Chief Investment Officer Chris Flagg.
“We’ve all become enamored with the Margaritaville brand,” Upshaw said. “It’s a lifestyle brand that sets a mood and a tone you don’t get from other brands.”
The waterfront project will include a spa, a 1.5-acre beach club, and a 43,000-square-foot, elevated outdoor terrace venue that will overlook the beach and beachside resort amenities, and can be used for a variety of events, Torgerson said. He added that there will be a ballroom that opens up to the outdoor terrace area that overlooks the ocean; about 50 percent of the resort’s rooms will look out over the terrace.
The beach club includes a sound stage near the pool area for live music, and there are three other areas throughout the resort for bands to plug in and play, Flagg said.
“We looked at the sponsorship and their ability to execute and complete the project. Drive-to leisure has been resilient amid COVID, and even looking back to the Great Recession,” Crosswy said. “Margaritaville-brand assets have performed well, including the food and beverage [offerings]. Fort Myers is drive-to and fly-to and is dependent on leisure, and [the resort] is at main and main in Fort Myers Beach.”
Mack Burke can be reached at [email protected].