C-PACE Financing
C-PACE Financing
To offset the effect of rapidly rising interest rates and high construction and renovation costs Spirides Hotel Finance Company has partnered with a large institutional C-PACE lender to begin providing inexpensive C-PACE financing for hotel development and renovation projects located in states which have enacted C-PACE legislation.
What is C-PACE?
The acronym C-PACE stands for Commercial Property Assessed Clean Energy, and this innovative, low-cost, long-term type of construction, renovation, and FF&E financing is typically paid back over 20-30 years as a public benefit assessment on a hotel’s property tax bill. With fixed interest rates of near 6%, C-PACE pays for the hard and soft costs of most things related to the energy efficiency, water conservation, building envelope, and renewable energy components of hotel construction and renovation projects. It can be transferred upon the sale of the property or prepaid. C-PACE can even be employed retroactively after a hotel has been built and opened.
The U.S. states that currently have active C-PACE programs are AK, CA, CO, CT, DE, FL, HI, IL, KY, MA, MD, ME, MI, MN, MO, MT, NE, NJ, NV, NY, OH, OK, OR, PA, RI, TN TX, UT, VA, WA, WI & DC.
C-PACE is the perfect way to reduce the amount of required owners equity and fill the capital stack or a financing gap in a project up to 95% LTC without using expensive mezzanine or preferred equity financing, and this type of financing does not require any personal guarantees. C-PACE rates are 50% less than mezzanine subordinate debt and preferred equity, and by using C-PACE instead of those more expensive traditional financing products this significantly reduces the project’s weighted average cost of capital, improves the IRR, and creates more free cash flow.
