This article is republished with permission from Green Street News.
The developer of an apartment complex in northwest Washington state has lined up $57.5 million of senior debt from Peachtree Group, including $29 million of commercial Property Assessed Clean Energy financing.
Grandview North is on track to complete the 350-unit Harrington Place, in Ferndale, by January 2026. Atlanta-based Peachtree funded $13 million of the debt at closing on Jan. 28.
The fixed-rate C-PACE loan has a 30-year term. The rest of the senior financing package, brokered by CapNorth, was structured as a $28.5 million, floating-rate construction loan with an initial term of 18 months, plus extension options.
As part of the deal, the term of an outstanding $20 million mezzanine loan from Hickory CRE Lending was adjusted to match that of the Peachtree floater. The project is expected to cost $90 million, which pegs the overall loan-to-cost ratio at roughly 86%.
New York-based Hickory originated its fully funded subordinate loan as part of a $77 million debt package that Arlington, Wash.-based Grandview lined up in April 2023. The package also included a $57 million senior-debt commitment from Bayview Asset Management of Coral Gables, Fla. Bayview’s portion, which never funded because construction was postponed due to permitting delays, was split between a $45 million construction loan from its Oceanview Life and Annuity affiliate and $12 million of C-PACE financing from its Bayview PACE unit.
Developers can use C-PACE loans, which are repaid via assessments collected with property taxes, to help finance commercial buildings that meet certain standards for energy efficiency and sustainability. For its part, Peachtree offers borrowers debt throughout the capital stack by providing such financing in conjunction with traditional construction and bridge loans, president Daniel Siegel said.
Harrington Place will comprise 11 buildings on an 18-acre site that Grandview has owned since late 2020. The 101 studios and 150 one-bedroom, 63 two-bedroom and 36 three-bedroom units will have quartz counters, stainless-steel appliances and full-size washer/dryers.
Amenities will include fitness, game and party rooms, a lounge, a playground, indoor and outdoor athletic courts, and a patio with grills. The property is at 6276 Portal Way, a half-mile west of the Nooksack River and 10 miles northwest of Bellingham, a growing city between Vancouver, Canada, to the north and Seattle to the south.
A wave of maturing debt has been a boon to business for Atlanta-based Peachtree Group. Peachtree Group, through its Peachtree Group Credit division, has deployed $556M in loans and another $526M to buy five hotels and develop another three projects. Recent deals include a $48M construction loan for a 215-room Autograph Collection hotel in Huntsville, Alabama, a $42.2M first mortgage loan to refinance the 133-room Motif on Music Row hotel in Nashville, Tennessee, and a $42M mortgage loan for the acquisition of Town Center at Cobb mall in Kennesaw.
The transaction market in the hotel industry has hit a stalemate over the past couple of years, with high borrowing costs sinking property values and regional and small banks struggling to originate debt. There is still opportunities to be had in this environment, though. Peachtree Group has deployed more than $1 billion in commercial real estate investments year to date, including $526 million to acquiring five hotels and three new development hotel projects.
Stonehill, a commercial real estate direct lender, ranked as the 8th largest U.S. commercial real estate hotel lender by the Mortgage Bankers Association ("MBA") 2022 loan origination rankings, a two-spot increase from the 2021 rankings. In 2022, Stonehill deployed $1.2 billion in real estate investment, with $813 million related to hotels.
Stonehill was also ranked as the 16th largest U.S. commercial real estate retail lender by MBA, having deployed $163 million in 2022.
"Our performance is a testament to our commitment to understanding our sponsors' business plans and accomplishing the transactions by having stable capital despite market turbulence,” said Mat Crosswy, Stonehill's president and managing principal.
Last year, Stonehill expanded its commercial lending business to originate and make investments across all real estate sectors by forming Stonehill CRE. This CRE group focuses on heavy transitional assets and sectors of the credit market that are traditionally undersupplied.
"Amid economic volatility and rising interest rates, traditional lenders have pulled back on real estate lending, creating a dislocation in the capital markets. At Stonehill, we have spent years building our capital formation, allowing us to originate loans and provide financing to real estate owners across all sectors looking to execute their business plans, even during periods of uncertainty," said Daniel Siegel, president, Stonehill CRE.
MBA's annual originations rankings report is a comprehensive set of listings of 149 commercial/multifamily mortgage originators, their 2022 volumes, and their different roles.
About Stonehill
Stonehill, a part of Peachtree Group, is a direct lender providing permanent loans, bridge loans, mezzanine loans, commercial property assessed clean energy (CPACE) financing and preferred equity investments secured primarily by hotel assets. Founded in 2013, Stonehill provides creative finance solutions for acquisitions, recapitalizations, refinancings and renovations and has completed over 510 transactions totaling over $5.4 billion. The principals of Stonehill have combined to originate, structure or purchase over $10.0 billion of debt.