Petros Supplies $27M C-PACE Loan on Chicago Multifamily Development
By Andrew Coen February 20, 2024 12:26 pm
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A joint venture between Melrose Ascension Capital and Singapore’s Q Investment Partners (QIP) has secured $26.5 million of Commercial Property Assessed Clean Energy (C-PACE) financing for its planned 18-story residential tower in Chicago.
Petros PACE Finance supplied the C-PACE loan as part of an overall $63.7 million construction financing package on the 117-unit 633 S. LaSalle led by Glacier Global Partners and BH3 Management, Urbanize Chicago first reported. Bank Julius Baer and undisclosed private investors provided an additional $26 million of equity.
Mansoor Ghori, CEO and co-founder of Petros, told Commercial Observer that the C-PACE loan enables long-term cost savings for the co-developers to fund energy-efficient features with the building’s infrastructure, electricity, plumbing and ventilation system.
“They wanted to maximize the amount of PACE and they wanted to minimize the overall cost of capital,” Ghori said. “The features that PACE is used for that a lot of properties need to have can be financed anywhere from 20 to 30 years, and that makes these energy-efficient measures much more profitable for the developers.”
Located at 633 South Lasalle Street, the project is slated for completion late 2024. The property’s amenities will include a fitness center, coworking lounge and rooftop terrace. There will also be ground-floor retail space
“The COVID-19 pandemic significantly impacted the timing of our groundbreaking, but we were fortunate that it afforded us the time to reposition, reimagine and navigate through a tremendously difficult period of escalating construction costs and rising interest rates to come out with an even better project,” James Coppack, head of development at QIP, said in a statement.
Nick Melrose, founder and CEO of Melrose Ascension Capital, said in a statement, that the development will cater to “young professionals and students” near Chicago’s colleges and central business district. Monthly rents will start at $1,650.
The deal marks the largest C-PACE loan in Chicago since Illinois Gov. J.B. Prtizker first rolled out the state’s program in October 2022, according to Ghori.
Ghori said the transaction took longer to come together than previous C-PACE loans in a higher interest rate environment since senior lenders are now seeking more equity in the capital stack.
“When the developer first started the project, they were entering this continually evolving market so it took several months longer than it probably should have,” Ghori said. “But at the end of the day, it got done and it’s over the goal line, and that’s what matters.”
Andrew Coen can be reached at acoen@commercialobserver.com.
