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Generation Completes $215M Hotel Portfolio Recapitalization

Posted on Wednesday, November 16, 2016

(RALEIGH/DURHAM/CHAPEL HILL, NC) In October, The Generation Companies, LLC (Generation), a Raleigh, NC based real estate developer, owner, asset manager and operator of extended-stay hotels, completed a $215 million recapitalization of its hotel portfolio. The funding consolidates four Generation-led partnerships totaling 23 hotels into a new partnership formed between Generation and affiliates of StepStone Real Estate (SRE). The transaction includes funding that will allow Generation to make substantial capital improvements to the existing portfolio and acquire new properties. Generation will continue to manage the 2,652-room portfolio, located primarily in the Southeast in Florida, Georgia, North Carolina, and Virginia, as well as in Texas and Tennessee.

Generation was represented by the Manhattan based investment bank Kimberlite. Willkie Pharr & Gallagher LLP was Generation’s legal team. JLL’s Hotels & Hospitality Group secured the $145.5 million recapitalization loan with Blackstone Mortgage Trust, the global real estate finance company that provided the non-recourse, floating-rate financing.

According to H. Mark Daley, III, Generation CEO, “This is a transformative transaction for Generation as we are now partnered with best-in-class, global investors across our entire capital stack. This event is highly strategic in that we now have an institutional caliber balance sheet, a more scalable platform, dedicated growth capital and in-place funding for an aggressive capital improvement program for our existing assets. This is a great way for us to celebrate Generation’s 20th anniversary.”

The Generation Companies is a Raleigh, North Carolina-based real estate developer, owner, asset manager and operator of extended-stay hotels in North Carolina, Virginia, Florida, Georgia, Tennessee and Texas. Generation, with more than 2,700 hotel rooms and $250 million in real estate assets under management and over 400 associates at 24 properties, is actively seeking new acquisition opportunities in the extended-stay and select-services segments. For more information, visit www.generationcompanies.com.

SRE is an affiliate of the StepStone Group (StepStone), focused on principal investments and advisory in real estate private equity. StepStone oversees over $96 billion of private capital allocations, including approximately $24 billion of assets under management, across real estate, private equity, infrastructure, real assets and credit. StepStone is a global firm with offices in Beijing, Hong Kong, La Jolla, London, New York, Perth, San Francisco, São Paulo, Seoul, Sydney, Tokyo and Toronto.