Peachtree approaches $750 million in CPACE financing

Approximately half of this year's CPACE transactions were in hospitality

CPACE financing
Peachtree Group secured $150 million in commercial PACE financing in December, reaching nearly $750 million since its establishment in 2019. The company completed 23 CPACE financing deals in the U.S. in 2023, totaling $250 million in directly originated and balance-sheet-funded transactions.

PEACHTREE GROUP SECURED $150 million in Commercial Property Assessed Clean Energy financing in December, bringing its total to nearly $750 million since its establishment in 2019. In 2023 alone, Peachtree completed 23 CPACE financing deals in the U.S., totaling $250 million in directly originated and balance-sheet-funded transactions.

Commercial real estate is set for a challenging 2024, with trillions of dollars in debt coming due, making refinancing more difficult, Peachtree said in a statement. This challenge is compounded by banks tightening lending standards.

“In this challenging lending market, CPACE financing has emerged as a crucial source of liquidity,” said Jared Schlosser, senior vice president of origination and head of PACE at Peachtree Group. “This financing option is becoming increasingly essential as owners grapple with looming debt maturities and limited refinancing opportunities.”

CPACE has reached a cumulative $5.2 billion in U.S. commercial real estate financings in just over a decade, according to PACENation. Approximately 50 percent of this year’s completed CPACE transactions were in the hospitality sector. This confirms the growing market adoption and acceptance of this innovative financing tool, the statement added.

“CPACE has been a game-changer by offering a unique advantage over other forms of financing with its long-term, fixed-rate financing that lowers the project’s cost of capital,” Schlosser said. “CPACE financing aligns with the financial, environmental and guest experience goals of hotels, making it a popular choice for owners looking to improve energy efficiency, reduce costs and enhance their sustainability initiatives.”

Some of the significant hospitality CPACE transactions in 2023 included: The Thompson in Palm Springs, California; El Caminante in Dana Point, California; The Marriott Tribute Hotel in St. Augustine, Florida; Palihotel in San Francisco; and DoubleTree by Hilton Youngstown Downtown in Youngstown, Ohio. Notable non-hospitality CPACE deals encompassed 950 3rd Street in Washington, D.C. (multifamily); Reserve at Vinedo in Paso Robles, California (multifamily); and Old City Hall in Tacoma, Washington (mixed-use).

“This innovative financing mechanism empowers property owners across all sectors to embark on energy-efficient upgrades, renewable energy installations, and water conservation initiatives, all while minimizing their financial burden,” Schlosser said.

Peachtree Group, ranked eighth by the Mortgage Bankers Association, is among the most active hotel commercial real estate lenders in the U.S. The company manages over $2.5 billion in equity and services, executing investments totaling around $9.3 billion in market capitalization.

In January, Peachtree Group secured a $73 million construction loan and C-PACE financing for a 263-key dual-brand Home2 Suites and Tru by Hilton Hotel in San Diego, California, on behalf of the Baxter Hotel Group.