MIAMI – Making a substantial commitment to hospitality and the inherent demand in the sector, Miami-based Driftwood Capital has closed a $1.2 billion recapitalization for an 18-asset consolidation with institutional support from Wells Fargo and ACORE Capital.
Financing for the transaction was led by Wells Fargo, acting as agent for a ~$330 million securitized senior loan. The SASBI refinancing of several properties allowed Driftwood to add more leverage to the portfolio. “Because the hotels have performed so well and we spent so much money fixing them, they were unlevered,” Driftwood Chairman and CEO Carlos Rodriguez, Sr. told Hotel Investment Today. “So, there was an opportunity to re-lever them a little bit and provide a cash out for investors.”
ACORE Capital, an institutional investor with ~$19 billion in assets under management, provided $85 million in preferred equity that should enhance returns for investors.
Rodriguez said the transaction has a five-year life, and Driftwood is going to be refinancing and selling the assets through the lifespan. By the end of the five years, he said they will have disposed of all 18 hotels. He added that similar bundling of other Driftwood assets is under consideration.
The 4,203-key portfolio with Hilton, Marriott, and Margaritaville-branded hotels across 10 states represents some of the most strategically located and well-performing assets in its platform, all of which are operated directly by the firm. The portfolio spans high-growth markets including California, Texas, Florida, North Carolina, Utah, and New York, and is backed by nearly $370 million in recent renovations and new development.
Restructuring the platform
This transaction also marks a major milestone in Driftwood’s strategy to create scalable hospitality portfolios, designed to maximize value through operational control, brand alignment, and portfolio-level synergies. Each asset has either been newly built or comprehensively renovated in recent years, and Driftwood emphasized that together they reflect a portfolio positioned for durable performance through current market volatility.
“This portfolio brings together some of the highest quality assets we own and operate, creating a uniquely cohesive investment opportunity for our partners,” said Rodriguez Sr. “We’ve intentionally assembled this particular portfolio of assets to reflect strength in markets, performance, and long-term fundamentals.”
Rodriguez added that this move reflects one more step toward what Driftwood is doing to restructure its hotel platform. “There’s more to come, and we’re very excited for it,” he said. “In the near future, we’ll be announcing a lot more transactions to strengthen our hotel platform.”
He said their plan is to further buy into the segment. “Hopefully we can buy other management companies, expand into Europe and go into other sectors of the hotel business like luxury lifestyle that we hadn’t touched until now,” Rodriguez added.
He also said that the impetus for the deal included the fact that now is not a great time to sell assets. “Not having a gun to our head and wanting to wait it out for a better time to sell hotels was part of it,” Rodriguez said. “In addition, this is now a much stronger group because if you’re 18 independent hotels and one has an issue, it’s very tough to deal with by itself. But when you have 18 hotels together, their combined strength helps you sustain through any bad times because you have a much stronger balance sheet and a bigger muscle.”
What also helped Driftwood make this move was their success doing a similar deal with their $800 million recapitalization of the Florida Space Coast portfolio. “It went so well that we decided to do it with these 18 hotels. Again, it worked very well,” Rodriguez said.
Carlos Rodriguez Jr., president and COO of Driftwood Capital, added, “We see this portfolio as a blueprint for how we intend to invest and operate in the next cycle. It reflects our focus on building high-quality, strategically located hotel portfolios—just like we did with our recent Space Coast Fund, which represented over $800 million in assets.”
By Jeffrey Weinstein
