Why Ohana loves being a specialist

LOS ANGELES — There are newer assets and older assets, but what if the asset is somewhere in between? That’s where the specialists come in.

“Hotel is a great sector for specialists,” said Eddie Yu of Ohana Real Estate Investors, when discussing the sweet spot of services the hotel lender provides.

Yu was recently promoted to partner and head of acquisitions at Austin-based Ohana. He joined the company in 2018 as a founding member of the investments team and spoke with Hotel Investment Today at the Americas Lodging Investment Summit (ALIS) by Northstar, a conference in Los Angeles, about the current state of hotel lending and why he’s optimistic about the acquisition market in 2026.

Yu said Ohana really leans in when it feels like it has an edge, generally during a transition with the asset.  

“Sometimes it’s a displaced cash flow. That’s where we live, and that’s where other lenders, who are generalists, can’t compete,” he said. “Most lenders are very strict on trailing cash flow being their metric and they don’t necessarily even know if that cash flow is going up or down, but that’s how they feel protected.

“We can make the same observation, but we can go several levels deeper and take on that kind of risk when those cash flows are displaced. We’re getting paid to do that because there’s a lot less competition and a lot fewer people who can do it. We’re able to underwrite what’s going to happen to that asset several years in the future.”

A perfect example of when this happens, Yu said, is an area where Ohana excels — when a newly constructed asset still needs to ramp up.

“People don’t understand that it can actually be harder for a lot of folks to understand than the older assets,” he said. “It’s almost like you would expect a newer asset to be worth more than an older asset. But in hotel-land, because people are so uncomfortable with the lack of data or don’t have the experience, they don’t know. They are very reliant on trailing cash flows or historical cash flows.”

Lacking cash flow data will scare many lenders off, Yu said. But not Ohana.

“We know what the hotel across the street did… what the hotel in a very similar but different neighborhood did and I can patch that together just with the data. Then we also go in and talk to everyone, and we look at their books, and then we’re able to figure out what the potential of this asset is,” he said.

You can go on STR and buy a bunch of top-line data. You can’t buy that P&L or that expense data, but we have it because we might even be in those markets with our own hotels. So we know a lot.

Eddie Yu

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“You can go on STR and buy a bunch of top-line data. You can’t buy that P&L or  that expense data, but we have it because we might even be in those markets with our own hotels. So we know a lot,” he said.

While Ohana owns many hotel assets, Yu said the company’s 2025 hotel activity was almost entirely lending. The company has learned a lot over its 17 years and can now lend across the capital stack that an owner might need. It also specializes in preferred equity, with average deal sizes typically ranging from $20 to $ 60 million.

“It really depends on where we have the best opportunities,” he said. “There’s still a big hesitancy to sell assets right now, but there are real liquidity issues in the market, and you can’t not sell assets forever. Then you also layer on if there’s any hiccup in performance, whether that’s because… you just finished your renovation, or something negative, like the market has pulled back a lot and you over-leveraged the asset. We will selectively do pref equity, where we really believe in the trajectory of the asset over the long term, and we think very highly of the sponsor.”

Yu said Ohana has buckets of capital for a wide range of investments right now, which gives them flexibility when talking to owners.

“We can go to all of our counterparties and say, ‘If you want to sell the asset, we would buy it at this price. If that doesn’t work and the market doesn’t give you what you want, we have other things that you need,’” he said, noting that it often comes with a conversation about what’s really driving a potential sale.  ”Now I can have a really good conversation about what you guys need to do next to achieve your goal?”

That kind of conversation can often happen with owners of newly constructed assets, Yu said.

Ohana sold its remaining position in the Waldorf Astoria Monarch Beach in Dana Point, California, to its partner in 2025. (Waldorf Astoria)

“They often are dealing with loan maturities and you usually get a break when you do your construction loan. People will believe the dream, and once you finish your construction, it’s time to prove it. That’s where we always come in. A lot of lenders will say, ‘I can’t, because I need the cash flow,’” he said. “We’ll say, ‘We looked at all your plans and we agree. We’re going to lean into that.’ We’re often a lot more right than we are ever wrong on that.”

Ohana’s deal activity

While Ohana didn’t make any acquisitions last year, Yu said the company had a great year for disposals, including selling its remaining position in the Waldorf Astoria Monarch Beach in Dana Point, California, to its partner, San Manuel Investment Authority (SMIA), for an undisclosed amount. Ohana also sold the Hyatt Regency Lost Pines Resort and Spa in Austin to an undisclosed private family office.

Last year was often defined by three seasons: an incredibly optimistic beginning of the year; Liberation Day, when most deal activity ground to a halt; and a more optimistic second half of the year, when transactions picked back up.

Yu said Liberation Day was incredibly disruptive and forced Ohana to reevaluate everything.

“Whenever there’s a big crisis, you can’t just keep marching on. You have to reset and [ask], ‘Do we still want to do this?’” he said. “We really had deals that bridged the first season, and then we had to look at them again. There was just too much uncertainty to continue with those deals at the same prices and we were very disciplined in that way, but it slows your deployment.”

Yu said he’s optimistic there will be more transactions in 2026 for one simple reason.

“You can only not transact for so long and I think that’s starting to happen. There is a need to move on from stuff,” he said. “We’re selling assets as well. Our investors really like it when we sell assets and return money to them…  Even if you’re in a position where you’re not making a good profit, your investors generally want their money back at some point… That will naturally create a transaction environment.”

We have some competitors that have shrunk. I don’t see many new entrants in the private equity fundraising business, but more people are exiting. It’s an uncertain time, but that’s leading me to believe that it’s a bit more of a buyer’s market.

Eddie Yu

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That said, Yu admits he doesn’t think the market for acquisitions is very competitive right now.

“I would actually say it doesn’t feel very competitive right now. Certainly, it only takes two to create a market, but it has felt like one of the weakest competitive fields that I’ve seen in many years,” he said. “On the private equity side… there are other sectors the generalists find easier to deploy into, namely data centers and similar things, which are sucking up a lot of air for others.

“We have some competitors that have shrunk. I don’t see many new entrants in the private equity fundraising business, but more people are exiting. It’s an uncertain time, but that’s leading me to believe that it’s a bit more of a buyer’s market.”

Yu said the bid-ask spread has been narrowing and said what he heard at ALIS leads him to believe more deals are on the way.

“[The spread is] starting to narrow and we’ve seen some trades that are really attractive from a cap rate standpoint and more reflective of what the market cap rate is,” he said. “At [ALIS], we’re hearing about some other premium trades that will show other data. People are starting to transact.”