Nuveen Green Capital made the news twice recently, and for good reason. First, the leader in sustainable commercial real estate financing solutions announced that it has closed on the financing of $190 million in C-PACE capital for the Virgin Hotels Las Vegas. The project marks the first C-PACE financed deal in Clark County, as well as the largest in Nevada, and second largest C-PACE financed deal in the country to date. Second, it announced that it has closed on a $76.2 million financing package for Bishop’s Lodge Auberge Resort in Santa Fe, N.M. The closing marks the first-ever C-PACE financed deal in the state of New Mexico.
C-PACE, which stands for Commercial Property Assessed Clean Energy, provides flexible financing solutions for new, ongoing, or recently completed commercial real estate projects. Available in 40 states and Washington D.C., C-PACE has grown in popularity in the commercial real estate market as an attractive financing mechanism, particularly in a capital constrained market.
In Las Vegas, C-PACE financing was used to recapitalize recently completed improvements to the hotel, including HVAC upgrades, LED lighting upgrades, window replacements, water-saving plumbing upgrades, building control system, pool and spa improvements and desert landscaping. The borrower was motivated to use C-PACE to refinance existing senior and mezzanine loans, in order to de-lever the property.
The Las Vegas deal is part of a larger trend in C-PACE financing that is impacting the West Coast, as well as the commercial real estate industry overall as an increasing number of owners and developers are turning to it as a cost efficient and flexible financing tool.
In New Mexico, C-PACE financing was used to recapitalize energy and water efficiency improvements that were part of the hotel’s $127.2 million renovation, which began in July of 2021, and will also be used toward several improvements, including a wastewater treatment facility, still to be made. The borrower was motivated to use C-PACE to refinance the existing senior loan on the property. The strategic use of C-PACE enables the asset to transition to more favorable financing terms, ensuring its continued profitability and growth.
Guest Column from PACE Equity
Green Lodging News has reported on many examples of C-PACE financing in recent years. A recent guest column on the topic by Tricia Baker, Senior Vice President of Strategy & Impact at PACE Equity, has gotten hundreds of reads so far. If you wish to know more about C-PACE financing, I highly recommend reading the article. Baker says that instead of high-interest rate mezzanine loans, savvy hotel developers are using C-PACE financing as a means to capture financing benefits and be rewarded for building efficient buildings.
“C-PACE financing is a public/private partnership legislated at the state level,” Baker says. “It offers private capital funding for items in a building’s construction budget that have a quantifiable water, utility, or renewable energy impact such as HVAC equipment and controls, water heating, indoor and outdoor lighting, elevators, plumbing, and of course electric vehicle car charging infrastructure or solar panel installation.”
Adds Baker: “When they secure a C-PACE loan, hotel developers can replace the significantly higher cost of mezzanine loans or their own equity capital, bringing down the total cost of capital for the project. C-PACE financing is also non-recourse, so personal risk is not an issue. Most C-PACE funding offers long-term, fixed-rate financing with 25 to 30-year terms.”
If you have utilized C-PACE financing for your efficiency upgrades, I would love to read about it. I can be reached at greenlodingnews@gmail.com.
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