Peter Berk of PMZ Realty Capital on Navigating the Unfamiliar Road Ahead


Peter Berk is president of PMZ Realty Capital LLC, a full-service real estate firm providing debt and equity for real estate projects—especially in the hospitality sector—on a nationwide basis. In these early days of the COVID-19 epidemic, Berk is fielding lots of calls from worried members of the hotel industry, and also hosted a webinar on the topic. Berk recently spoke to LODGING and shared his advice on weathering this storm for panic-stricken owners. In addition to handwashing, Berk stressed the importance of opening early communication with lenders and seeking guidance from trustworthy advisors and sources of information.

What are you saying to owners afraid of losing their properties now that travel is so drastically reduced?

We’re waiting for information now—things are changing by the hour—so while we figure things out, my job is mainly to offer reassurance. I tell them if they can’t make their mortgage payments or otherwise meet their obligations, they need to communicate with their lenders as soon as possible, perhaps try to come up with a short-term solution that shows good faith.

Hoteliers with portfolio loans—especially if they have taken out commercial mortgage-backed securities loans—should open such communication by first sending a letter explaining who they are and what their situation is. In addition to containing their property location and property ID number and their request to open a dialogue, this letter should provide support for their creditworthiness including a history of good payment; good guest satisfaction survey and quality scores; a good market position including demand generators; and a favorable STAR ranking.

I myself feel pretty confident that lenders wouldn’t go so far as to foreclose every struggling hotel in the United States; they may agree to defer some payments or take actions such put them in default for late payments or forbearance for three months.

What about lending—what’s happening on that side?

Although hotels will be able to take advantage of interest rates cut to nearly zero by the Fed, there’s no real lending going on right now while things are so uncertain. But the belief right now is that things will be better in the third and fourth quarters of this year.

Given that many expected at least a slight downturn in the industry after such a long period of record highs, why has this been such a hit?

You need to understand that hotel owners and developers are optimists; they not risk-averse, by nature. Building hotels requires a lot of risk. When we do cash-out loans with these entrepreneurs, they don’t put that money in the bank; they reinvest it in new hotels. So, they aren’t sitting on large reserves of cash. If they were conservative and concerned, they wouldn’t risk personally signing a $10 million construction loan and taking out $2-3 million to build another hotel. I myself would never do that. That’s why I’m not a developer.

What is your advice to those who are sweating now?

Other than “wash your hands”, I’d say, pay your mortgage if you can and arm yourself with information. A good strategy at this time—and for life in general—is to try to make sure there are no surprises. You need to communicate with your lender about your situation, but I suggest you first contact your lawyer to go over your loan documents to see what your rights are. And stay tuned for more information.

What news and information sources can hoteliers trust at a time like this?

I’d tell them to read reputable industry publications—like LODGING—and speak to people well established in the industry. They should definitely avoid those who contact them via blind email, for example, “consultants” offering services such as help in restructuring loans or offers of a forbearance. No one reacts that quickly; beware of scammers looking to make a quick buck. Just be careful, like you would in a personal situation.

What do you think is ahead for the industry?

My crystal ball says it’s going to be a rough April and May, but I see things starting to change in June. This virus is likely to be with us for a long time, but people will want to get back to their normal lives.

This article originally appeared in Lodging Magazine on April 6, 2020

PMZ has refinanced a substantial portion of our portfolio: 18 loans for both limited and select service hotels across four states, in excess of $200 million total in-debt financing. I always value PMZ’s insight into the current state of the financing market. They are always responsive, enthusiastic and have in depth knowledge of the financing markets. I am confident that PMZ would add value as financial consultants/brokers from their experience in the hospitality industry.

Hasmukh (H.P.) Rama
Auro Hotels (Formerly JHM Hotels), Chairman of the Board

PMZ has worked with our franchisees for over two decades financing all of the Hilton brands.  They have extensive experience with our brands and in the capital markets and have provided outstanding customer service.  Their business consistently finds creative financing solutions for our licensees, which, in turn, helps the Hilton Franchise Development Team achieve our growth objectives. PMZ brings trust and commitment to our franchisees.  We look forward to continuing our relationship with PMZ and recommending them to our franchisees in the future.

Bill Fortier
Senior Vice President Development, Hilton Worldwide 

We have worked with the PMZ team for many years.  They have done exceptional work for us in securing great financing for our assets in multiple locations.  They are professional and knowledgeable in all aspects of real estate finance.  

Mitch Patel
President & CEO, Vision Hospitality Group

I’ve had the opportunity to complete a dozen debt and equity transactions with Mike and Peter over the past ten years and value their financial and business insight. They bring innovative ideas and fresh thinking to each of their deals, and helped structure both debt and joint venture transactions that exceeded our expectations. Above all, we respect them and their firm as trustworthy advisors who are focused on their clients and their needs.

Ashish Parikh
Chief Financial Officer, Hersha Hospitality Trust

PMZ and their team of experts has been arranging financing for IHG owners for over 20 years. Their deep understanding of the hospitality industry, and the capital markets, has allowed many of our owners to secure the necessary financing to grow and expand their portfolios. PMZ has always and continues to put relationships first by acting with transparency and professionalism throughout their entire process. We appreciate what they do for IHG and the hotel industry as a whole.

Julienne Smith
Chief Development Officer, The Americas IHG Hotels & Resorts

I have worked with PMZ for over 10 years and during that time have had nothing but positive experiences.  They deliver at closing exactly what they promised at the beginning of the project.  PMZ has helped Sun Companies secure over $150 million in financing for such brands as Hilton, Marriott, and IHG.  Their business is relationship-based, therefore, they are the perfect partners for us and essential to our company’s growth.

Bharat Patel
Chairman & CEO, Sun Development Company

I’ve completed a myriad of transactions over the past 10 years with Mike and Peter and their clients. Through the ups and downs of the real estate market cycle, they have consistently presented us with transactions that are attractive based on current market dynamics. Throughout the process from origination to closing they have been a strong advocate for their clients, and on more than one occasion, thought of an innovative solution to structure around significant issues. Their creative thinking has benefited their clients and made me confident that once we begin a transaction, it will lead to a successful closing.

Michael Amoia
Director, NY based insurance company

I initially called Peter and Mike several years ago when I was seeking refinancing of two of our properties in Pennsylvania. The lender we were working with at the time had changed the terms on us several times. I explained the situation to them, and they assured me that they would close at the same exact terms or better than originally quoted. Not only did they close at better terms then originally outlined, but they exhibited a sense of professionalism and integrity that every intermediary should possess. I have since worked with Peter and Mike on several other transactions, and their high level of service is consistent. I would recommend the PMZ without hesitation to anyone seeking financing.

Atul Patel
CEO, HMB Management, Allentown, PA

Our firm currently operates over 75 hotels and restaurants in the upper midwest. When we wanted to arrange financing for eight of our limited and full service hotels in Iowa and Kansas, we started working with Peter after he was highly recommended by several of my peers. He did not disappoint us. He understood our unique local markets and secured $60 million from a national insurance company. We have since engaged his firm several other times to arrange financing for us. There is no doubt in my mind that the professionalism and knowledge of PMZ will benefit anyone looking to finance or refinance hotels.

Bruce Kinseth
Executive Vice President, Kinseth Hospitality Companies

The loan arranged by PMZ allowed us to retire our existing financing and provided a stabilization period for the Embassy Suites now that the renovation is complete. By providing us with multiple financing options, PMZ helped us find the best lender suited to our specific needs.

David Marvin
Founder and President, Legacy Property Group

PMZ has brought us multiple financing quotes and helped us select the one most advantageous to the ownership group. They have consistently helped us navigate the closing process flawlessly.

Danny Patel
CEO Peachstate Hospitality, Former Chairman Asian American Hotel Owners Association (AAHOA)