INVESTMENT
C-PACE financing momentum
GROWS
C-PACE HAS PROVEN TO BE A VERY USEFUL TOOL FOR DEVELOPMENT DEALS AND FOR DISTRESSED PROJECTS , AND IT CAN BE PAIRED WITH SENIOR MORTGAGES , MEZZANINE DEBT , OTHER GOVERNMENT LENDING PRODUCTS AND MORE .
Contributed by MATT RAPTOSH , MANAGING DIRECTOR , BERKADIA HOTELS & HOSPITALITY
Commercial-Property Assessed Clean Energy ( C-PACE ) financing is one of several very useful tools for providing liquidity or securing financing for hospitality assets , especially in the face of difficult conditions presented to the hotel industry , and market , over the past three years .
C-PACE is a financing vehicle adopted and approved in 38 states plus the District of Columbia by which developers of commercial real estate can secure attractive financing investments for improvements made to a property that provides a sustainable or “ green-energy ” benefit . The project is qualified by a standard energy audit and then funds are provided for sponsorship based on regulations and rules unique to each state . This debt instrument acts as a tax lien and servicing payments are made at the propertytax level . If a developer can do 30 % to 40 % of the capital stack at
C-PACE , at what ’ s likely an attractive rate , it can bring the overall rate down significantly .
C-PACE providers have even helped push C-PACE approval legislation at the state level . Pairing the providers with the right client is where the magic lies . The win-win for developers is they can incorporate energy efficiencies and benefit from lower interest rates .
Berkadia Hotels & Hospitality has been extremely active in placing C-PACE , especially within construction deals over the past three years , as traditional debt markets have become unstable in terms of pricing , proceeds and availability of capital .
C-PACE may be non-recourse , with self-amortizing terms of 25 to 30 years . It features fixed interest rates at more attractive pricing than current senior mortgage rates . C-PACE loans are also fully
62 hotelsmag . com Jan / Feb 2023