Happy Friday. C-PACE Weekly is your go-to source for the latest insights, updates, and opportunities in the Commercial Property Assessed Clean Energy (“C-PACE”) sector. Let’s dig into the latest news!

September 27th, 2024

Securing financing for hotel developments has become an increasingly complex challenge, especially in today’s economic environment. As interest rates remain high and lenders become more conservative, developers often face significant hurdles in obtaining the necessary capital to bring their projects to life.

A recent $73 million origination for a 263-room dual-branded Hilton hotel development in San Diego demonstrates how creative financing structures, combining construction loans and Commercial Property Assessed Clean Energy (CPACE) financing, can overcome these obstacles.

The Financing Challenge

Hotel development financing has always been more complex and difficult to obtain, but in the current environment, these challenges are amplified. Higher interest rates, sticky inflation, and economic uncertainty have made traditional financing more expensive and difficult to secure.

This environment creates significant headwinds for developers, who must overcome significant obstacles to get a project off the ground. Traditional banks, which previously provided the bulk of construction financing, are now more reluctant to offer favorable terms or any financing. This forces developers to seek alternative financing methods to balance debt costs while meeting the project’s capital needs.

$50.4MM Senior + C-PACE Deal

In the San Diego deal, a $50.4 million floating-rate construction loan was central to the financing structure. This short-term loan bridges the gap between the construction phase and permanent financing or the sale of the property.

In this case, the construction loan provided the flexibility needed for a hotel development project to proceed, as cash flow will not be generated until the hotel is operational.

Read more here.

Why C-PACE Is a ‘Swiss Army Knife’ for Senior Housing

These innovative iterations are helping unlock value and facilitate development for developers, sponsors, and for-profit owners of senior housing properties. Depending on the local and state program guidelines, it offers unusual flexibility and beneficial terms for qualified improvements in energy, lighting, water systems, building envelope, and other resiliency components.

One of those examples is C-PACE, which helps challenged senior housing projects to begin building.

For the 131-unit Ravella at Ormond Beach, Fla., $4 million in C-PACE helped complete construction with an attractive 25-year fixed rate and created an overall package for the project at 80 percent combined loan-to-cost.

In Colorado, a major congregate care development offering assisted living, transitional living, and memory care was facing headwinds, and C-PACE provided a needed $6 million addition to the capital stack to get underway. The C-PACE component for Mesa Verde, a 124-unit senior living community in Durango, helped fund primary building systems, including HVAC, electrical, plumbing, and roofing.

Read more here.

Lone Star PACE Facilitates $3.5M in C-PACE Financing for Renovation of Suburban Office Building in Dallas

Lone Star PACE, a leading administrator of Texas’ Commercial Property Assessed Clean Energy Program, announced today that it helped arrange $3.5M in C-PACE financing for sustainable building renovations at Meadow Park Tower in Dallas County.

The 263,000-square-foot, 15-story, multitenant office building is located at 10440 N. Central Expressway in Dallas. It was constructed in 1986 and renovated in 2016. A subsequent renovation began in 2022 and includes the installation of sustainable building components, including energy-efficient windows and walls, LED lighting, improved HVAC systems, and low-flow plumbing.

President of Lone Star PACE, Lee McCormick said: “It was an honor to partner with Bradford MPT Partners and Bayview PACE on this project, which breathes new life into a landmark office tower at the heart of North Dallas. C-PACE financing is a great tool to incentivize the modernization of aging building stock, which is especially valuable in today’s evolving office market.”

C-PACE allows property owners to access low-cost, long-term financing for energy and water conservation systems in commercial buildings. Owners can use C-PACE to finance new construction, building retrofits, or recapitalizations.

Read more here.

🎧 LISTEN: An NYC C-PACE Update with Mansoor Ghori

Lendlease and Aware Super Close $315.5M Financing for Habitat a Culver City Mixed-Use Project

Habitat is an office, multifamily and retail project at 3401 S. La Cienega Boulevard. Scheduled for completion in 2026, Habitat will comprise a six-story office building, a 260-unit, 12-story luxury apartment complex and 2,900 square feet of ground-floor retail and restaurant spaces.

Lendlease and joint venture partner Aware Super closed on $316 million in construction funding for Habitat.

Habitat, designed by SHoP Architects and Steinberg Hart, will feature a, a six-story creative office building with over 253,000 square feet of space. The project also boasts a one-acre integrated park space designed to enhance the urban environment, offering a blend of professional and personal well-being for residents and workers alike. Habitat offices will feature 50,000-square-foot floor plates with 14-foot heights, natural light and terraces.

One of the standout features of Habitat is its commitment to sustainability. The development is designed to achieve net-zero carbon emissions, incorporating a solar array and extensive EV parking to reduce its environmental footprint. Lendlease's emphasis on environmental stewardship aligns with the City of Los Angeles' broader goals for green growth, positioning Habitat as a model for future urban developments.

Los Angeles-based landscape architecture firm RELM designed Habitat's network of parks and walking trails, which include both secluded seating areas and communal gathering spots. The integrated acre of open space connects the two terraced buildings with surrounding amenities, promoting a healthy lifestyle with a strong connection to nature.

Habitat is committed to achieving net-zero carbon in construction and operations, featuring a 125kW solar array, 64 electric vehicle parking spots, 222 secured bike parking spaces, natural ventilation, and lower-carbon concrete. Lendlease aims for LEED Gold certification for the residential building and targets making the commercial building the first new creative office in Los Angeles to achieve LEED Platinum.

Lendlease secured funding from Barings and Counterpointe Sustainable Real Estate. The firm previously worked with Barings on financing for Claremont Hall, a 41-story condo tower in New York. Counterpointe said it provided $156 million of C-PACE financing on the project.

Read more here.

Want to learn more about C-PACE? Get started with the articles below:

• What You Need To Know About C-PACE

• Step-By-Step Guide

• History of C-PACE

• Policy & Legislative Framework

• Eligibility of C-PACE

Have a story we missed? Drop us a note → [email protected]

Top Reads by Month

September read: Carlyle Commits $1B towards C-PACE with North Bridge Partnership

August read: Columbia Pacific & Nuveen Green Capital Lend $48M Full Stack for Townhome Project

July read: C-PACE Alert: Dwight Capital Launches C-PACE Lending Platform

June read: 4 big stories this week in C-PACE

About C-PACE.COM

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C-PACE.COM was founded by investment professionals with meaningful experience in real estate investment banking, private credit, private equity, and development. Through C-PACE Financing, we seek to reduce the carbon footprint created by commercial real estate and generate superior risk-adjusted returns for our clients.

At C-PACE.COM, we are the #1 Trusted Source for C-PACE loans and actively lend across all asset types and geographies in the U.S.

If you have any questions regarding C-PACE or want to discuss your project further, drop us a line → [email protected].

Thanks for reading!

Cheers,
Jonathan Seabolt
Founder & CEO
C-PACE.COM