STONEHILL PACE HAS completed approximately $150 million in commercial property assessed clean energy (C-PACE) loans over the past 12 months. The loans can be applied to renewable energy and energy-efficient components and seismic retrofitting within the hospitality, multifamily, senior living, industrial and mixed-use real estate sectors.
Stonehill PACE is a subsidiary of Stonehill, itself a subsidiary of Atlanta-based Peachtree Hotel Group, led by Jatin Desai and Mitul Patel, who are principals of Stonehill and Stonehill PACE, as well as members of the Stonehill’s investment committee.
“We effectively doubled our commercial property assessed clean energy originations last year, growing to more than $300 million,” said Jared Schlosser, senior vice president and 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.”
Eight of the 18 transactions completed over the past year were multifamily and senior housing. Seven were hotels and one was in industrial and mixed-use sectors. Stonehill PACE also completed one of the first condominium developments utilizing C-PACE with a $10.6 million loan for a high-rise development in Washington D.C.
Other transactions included a $13.8 million loan for Mesa at Laguna Ridge apartments in Elk Grove, California, that led to a 95 percent 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.
C-PACE allows commercial property owners to obtain low-cost, long-term financing for energy efficiency and renewable energy upgrades to commercial buildings using borrowed capital, which is repaid as a surcharge on the owners’ 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 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, according to Stonehill PACE.
“As PACE funding becomes increasingly accepted, our volume of business has grown in tandem,” Schlosser said. “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.”
Last year, Stonehill completed a $104 million construction loan to TPI Hospitality for a 254-key Margaritaville Resort in Fort Myers Beach, Florida. Stonehill also recently originated a $28 million loan to fund construction on a 167-key, all-suite Marriott SpringHill Suites hotel in Tampa, Florida.