North Bridge Makes $50M C-PACE Loan to Refinance Hotel in Berkeley, Calif.
Pyramid Global Hospitality opened the Residence Inn Berkeley in 2021
By Brian Pascus October 10, 2023 4:00 pm
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Pyramid Global Hospitality, a Boston-based hospitality developer and manager, has secured $50 million in C-PACE funding to refinance the Residence Inn Berkeley, a 331-key hotel in Berkeley, California that opened in 2021.
The closing, which occurred on Sept. 29, is the fourth-largest hotel financing using the federal C-PACE program to date and the largest hospitality deal under the C-PACE umbrella so far this year.
North Bridge, a New York City-based C-PACE lender, provided the $50 million loan, which is part of a construction financing take out. The financing also included a mezzanine loan provided by Prime Finance and a senior loan from an unnamed debt fund.
Lantern Real Estate Advisors arranged the transaction on behalf of the sponsor.
C-PACE — which stands for Commercial Property Assessed Clean Energy — is a state-run program funded by private capital designed to incentivize developers or building owners to enhance a project’s sustainability through green energy and renewable energy features in exchange for access to favorable financing terms. C-PACE financing became available in 2009 and is currently available in 36 states and the District of Columbia, according to the United States Department of Energy.
Laura Rapaport, founder and CEO of North Bridge, said that most developers don’t realize that C-PACE can be used retroactively, and is not limited to new construction projects.
“A lot of people, in terms of C-PACE, think of it solely to be used on go forward basis for renewables, but what many do not know is C-PACE can be used retroactively in many states with a look-back of up to three years from TCO [temporary certificate of occupancy],” she told Commercial Observer. “As an investor and lender, I can tell you there are a lot of projects that can access the financing today and they don’t even realize they can get it.”
Rapaport added that Pyramid Group is looking to lower the hotel’s weighted cost of debt by using C-PACE’s accretive, fixed-rate financing structure to reduce their interest payment burden.
“Even though the project was built as a LEED Gold building, not a passive house, not net-zero, not platinum, there’s so much in it that qualifies,” she explained. “But they can get credit today and access funds for money they’ve already spent. What counted here was the HVAC system, the curtain wall, the building’s seismic resiliency — the list goes on and on.”
Located at 2121 Center Street near the University of California, Berkeley campus, the hotel is part of the Marriott brand. The building was the first ground-up hotel completed in the city since 1976.
Brian Pascus can be reached at bpascus@commercialobserver.com.
