Stonehill PACE completed approximately $150 million in commercial property assessed clean energy (C-PACE) loans over the past 12 months for renewable energy and energy-efficient components and seismic retrofitting within the hospitality, multi-family, senior living, industrial and mixed-use real estate sectors.
“We effectively doubled our commercial property assessed clean energy originations last year, growing to more than $300 million,” said Jared Schlosser, SVP/head of Stonehill PACE. “While we are known predominantly for our lending activities within the hospitality arena, a large percentage of our 2021 volume was in other real estate asset classes.”
Of the 18 transactions completed over the past year, eight were multi-family and senior housing, seven were hotels and one was in industrial and mixed-use sectors. The company also completed one of the first condominium developments utilizing C-PACE with a $10.6-million loan for a high-rise development at 950 3rd St. in Washington, DC.
Other notable transactions include a $13.8-million loan for Mesa at Laguna Ridge apartments in Elk Grove, CA. The company achieved a 95% combined loan-to-value with C-PACE financing. Additionally, Stonehill PACE provided $17.8 million in C-PACE retroactive funding for the Element San Jose Milpitas (pictured).
Commercial property owners utilize C-PACE to obtain low-cost, long-term financing for energy efficiency and renewable energy upgrades to commercial buildings. C-PACE uses borrowed capital, which is repaid as a surcharge on their property taxes for up to 30 years.
According to research in the Journal of Structured Finance, a driving factor in the growth in C-PACE financing is the increased focus of Environmental, Social and Governance (ESG) initiatives. As more property owners become aware of C-PACE, they find it an attractive addition to their capital stack for financing building improvements to address climate change and natural disaster concerns.
“As PACE funding becomes increasingly accepted, our volume of business has grown in tandem,” said Schlosser. “To meet the demands of our new growth, we have added nine full-time members in 2021 with plans to add another half dozen associates in 2022.”