VCP Medical Office
Peachtree Offers Mid-Construction Relief with Retroactive CPACE Financing
An experienced CPACE lender, Peachtree Group originated a retroactive CPACE (commercial property assessed clean energy) loan for $5.0MM for a medical office building in Atlanta, Georgia. The development is a newly constructed, five-story building with 71,888 square feet of rentable Class A space. Construction was completed in late 2023 and 31% pre-leased with four tenants. The borrower projected stabilization at 95% occupancy by the end of 2025.
Peachtree Group came into the deal mid-construction using a retroactive pace loan to help with cost overruns. CPACE proceeds were used to cover efficiency and conservation measures installed during construction such as building envelope, windows, HVAC, lighting systems, and water fixtures.
Strong Basis
The CPACE financing is less than the value of the land with a strong debt service coverage ratio (DSCR) throughout the loan with 5.91x in year two. In addition, the retroactive CPACE loan has a loan-to-value (LTV) of 10.8% and a loan-to-cost (LTC) of 14.1%.
Experienced Sponsor
The Sponsor is an experienced real estate developer with an extensive track record of developing medical office, retail, and multifamily. The sponsor guaranteed CPACE payments to an institutional senior lender, who has 50% recourse until the property is 50% leased. At loan signing four tenants were committed.
Proximity to Demand Drivers
The Subject is a newly constructed Class A office building located across the street from Piedmont Hospital, the 643-bed flagship hospital of Piedmont HealthCare. Also across the street is Shepard Center, a 152-bed hospital that specializes in spinal cord injury and other neuromuscular conditions. The location is close to major highways including Georgia 400, Interstate 85, and Interstate 285; as well as along public transit via the Metro Atlanta Rapid Transit System (MARTA).
Learn More about CPACE Financing
- What is CPACE Financing?
- How CPACE Differs from Mezzanine Financing and Preferred Equity
- Requirements for CPACE Loans
- Benefits of PACE Financing
- Types of CPACE Loans
- CPACE Financing Frequently Asked Questions
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