COMMERCIAL REAL ESTATE direct lender and Peachtree Group affiliate, Stonehill, completed $1.2 billion in investments in 2022. Most were through loan originations and commercial property assessed clean energy financing primarily in the hospitality and retail sectors, a statement said.
The investment includes $813 million in loans and $163 million as CPACE financing and the remaining $269 million was distributed across the industrial, land, mixed-use, multifamily, office and senior living real estate sectors, the company said. Stonehill said that its 2023 target is $1.5 billion and expects to invest $300 million in the first quarter.
"Economic volatility coupled with uncertainty surrounding interest rates has severely decreased overall financing availability with capital providers. However, Stonehill not requiring capital markets execution has allowed it to remain active and to fill the gap in lending supply," said Mat Crosswy, Stonehill president and principal.
In May 2022, Stonehill formed Stonehill CRE with Daniel Siegel as president to expand its commercial lending business. It focuses on heavy transitional assets and sectors of the credit market that are traditionally undersupplied.
"We have spent years working on our capital formation, specifically so that we can be active and grab market share during periods of economic uncertainty. Also, by building our CPACE division in 2019, which completed $235 million in CPACE financing for the year, and now with Stonehill CRE, we are better positioned to provide lending solutions to a multitude of the market's current inefficiencies,” said Crosswy.
According to the statement, the current Secured Overnight Financing Rate curve, a broad measure of the cost of borrowing, forecast decreasing rates by year-end and rates beginning to normalize in 18-24 months.
However, the company said that short-term disruptions and uncertainty will not preclude Stonehill from investing in the market and extending credit for the right deals.
"A majority of the transactions we are financing have some capital or management improvements to be made during the term for them to be competitive with their overall peer group, so the value is derived more from the execution of a business plan rather than appreciating in value based on market stability,” said Jared Schlosser, senior vice president and head of Stonehill PACE, the Property Assessed Clean Energy financing division of Stonehill.
In November, Stonehill PACE has provided $16.3 million in its first commercial property assessed clean energy financing in Washington.
