With financing still hard to come by, developers are getting creative with alternative lending, like C-PACE.
The HALL Group used the clean energy financing to recapitalize recent upgrades to HALL Arts Hotel.
The Dallas-based developer secured a $27 million loan from the Commercial Property Assessed Clean Energy program, which is administered through the Department of Energy to bolster projects related to energy efficiency.
Lone Star PACE is the administrator on the deal.
“Retroactive C-PACE financing is the perfect complement to projects that aim to advance sustainable development without sacrificing returns in the process,” Lone Star PACE president Lee McCormick said.
The 183-key hotel, which is part of the Curio Collection by Hilton, features an extensive art collection and a second-floor restaurant, Ellie’s Restaurant & Lounge. The hotel opened in 2019 and rises 11 stories in Dallas’ Arts District at 1717 Leonard Street. Condé Nast Traveler named it one of the 20 best hotels in Dallas in April.
The financing covers previously implemented sustainable upgrades to the building envelope and electrical, lighting, HVAC and plumbing systems.
The terms of the loan were not provided, but this type of financing is typically priced at a spread of 350 to 400 basis points with the 10-year U.S. Treasury bond yield and amortized over 25 to 30 years, said Julianna Brooks, a C-PACE consultant and president of Dallas-based Civitas Finance Solutions.
C-PACE financing rapidly gained popularity when interest rate hikes made borrowing more difficult, Books said. It can be used for up to 25 percent of a project’s capital stack.
The HALL Group was founded in 1968. Its subsidiaries include companies devoted to commercial real estate development, finance, winemaking and venture capital.
Lone Star PACE works with national lenders and local municipalities as an administrator for Texas’ C-PACE program. It’s based in Frisco.
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