Discover Creative Capital Solutions in a Challenging Market
Listen to Our Podcast!
Listen on Spotify!
Listen on Apple Podcasts!
In the latest episode of Peachtree Point of View podcast, CEO Greg Friedman sits down with EVP Jared Schlosser, who specializes in hotel lending and C-PACE financing. Their conversation offers valuable insights into navigating today's dislocated credit markets and finding creative solutions to capitalize commercial real estate projects.
Jared, who joined Peachtree in 2019 after beginning his career during the 2007 market downturn, provides a unique perspective on the dramatic shift in credit markets since then. He explains how developers are struggling with rising costs and persistently high interest rates that make traditional financing structures difficult to pencil.
Senior + CPACE The discussion centers on how Peachtree is helping clients overcome these challenges, with particular focus on C-PACE (Commercial Property Assessed Clean Energy) financing as an innovative tool. This state-by-state legislative product allows financing for specific elements of construction (roofing, HVAC, elevators, etc.) through long-term fixed-rate loans repaid via property tax assessments.
What makes this strategy particularly powerful is the ability to combine C-PACE with senior debt to achieve higher leverage at a lower blended cost of capital. For example, on a $100 million project, developers might secure $30 million through C-PACE at 7.5% fixed (half the cost of traditional mezzanine debt), allowing them to finance 75% of project costs at favorable rates while maintaining acceptable returns.
Case Study: Washington Multifamily Jared shares a recent success story from Washington state where Peachtree provided both senior debt and C-PACE financing, partnering with Hickory for mezzanine debt to deliver an impressive 87% capital stack. With Peachtree providing 70% through the combined senior and C-PACE loans, the borrower secured an attractive blended cost of capital for a higher-lever age construction loan. The multifamily project is located in an underserved secondary market with limited recent development—a focus area for Peachtree.The deal also featured flexible terms allowing the borrower to potentially payoff the C-PACE portion if rates decline.
Key Takeaways:
C-PACE financing offers developers a powerful tool to replace more expensive capital in the stack, potentially reducing costs by hundreds of basis points compared to traditional mezzanine or preferred equity.
In today's market, there are "no slam dunks" - every deal has challenges requiring creative solutions, thorough vetting, and proper risk structuring.
Peachtree's ability to provide both senior loans and C-PACE financing creates a significant competitive advantage, allowing them to deliver financing packages higher up the capital stack.
Speed and execution are critical in this environment, as many lenders fail to close deals due to improper risk assessment or changing credit committee decisions.
Secondary markets with limited new supply present attractive investment opportunities, particularly for multifamily development.
Listen to the full Peachtree Point of View podcast to gain deeper insights into how you can leverage these creative capital solutions for your next commercial real estate project. Follow Peachtree Point of View on your favorite podcast platform to stay informed on investment strategies in today's challenging market.
Related posts
If you enjoyed this article, read through these related press releases and insights.
ATLANTA (Feb. 2, 2024) – Peachtree Group announced the company originated a $34.5 million loan for the acquisition and renovation of a 312-unit multifamily property in Gainesville, Fla., on behalf of Coastline Management Groups (Coastline), a Hollywood, Fla. based service-oriented real estate management company. The property, Pavilion on 62nd, is a 25-building, 312-unit multifamily used previously for student housing.
The Peachtree Group team originated the floating-rate bridge loan over a three-year term, representing 61% of the stabilized appraised value.
The multifamily property contains 31.74 acres and features two-, three- and four-bedroom units with onsite property management, two clubhouses, two swimming pools, workstation cubicles, a game room, a media room, rentable event room, a gym, indoor racquetball and half-court basketball, sand volleyball court, dog park and package receiving center.
Coastline will use approximately $5.0 million of the bridge loan proceeds to renovate unit interiors, convert four-bedroom units to three-bedroom units, expand the onsite amenities and complete deferred maintenance on exterior and common areas.
About Peachtree Group
Peachtree Group is an investment firm driving growth with a diverse portfolio of commercial real estate assets and other ventures. We’ve executed hundreds of investments since inception with a focus on real estate acquisition, development, and lending. Today, we manage billions in equity, augmented by services designed to protect, support, and grow our investments.
Peachtree Group is a nationwide direct balance-sheet lender, offering competitive terms, in-house loan servicing, and flexible capital to handle a wide array of projects.
Peachtree provides full-stack debt capital solutions to qualified commercial real estate owners across all sectors throughout the U.S. We offer bridge, construction, mezzanine, preferred equity, CPACE, permanent and NNN financing.
See below for some of the most recent loan transactions from Peachtree Group including hotel loans, retail, multifamily, industrial, and land.
Need Financing? Contact us at lending@peachtreegroup.com.
Peachtree Group Closed 24 Loans Totaling $630MM in the Last 90 Days
Revitalizing Lawrence: Peachtree’s $44MM Investment in The Benjamin
Anatomy of the Dealis a new series where we sit down with senior leaders from Peachtree Group to dive deep into the intricacies of a deal they've led, exploring the strategy, challenges, and decisions that shaped its success.This week's episode we delve into Peachtree's $44MM Loan for The Benjamin, a multifamily development. We are joined by Greg Koenig, Senior Vice President of Credit for CRE at Peachtree Group, who led this transaction.
Peachtree Group Closed 12 loans totaling more than $250MM in the last 90 days
FEATURED: Versatile Hotel Financing with both Senior & CPACE Origination
Peachtree Group originated a $50.4MM first mortgage and a $22.4MM Commercial Property Assessed Clean Energy (CPACE) financing for the development of the dual-brand, 263-room hotel located in Southern California. This project highlights Peachtree Group’s competitive advantage by demonstrating its ability to fully execute both Senior and CPACE loans.
Peachtree Group worked with the Sponsor to pay off its maturing loan while executing a business plan to upgrade its property to better compete in the marketplace and retain its Hilton flag.
Doradus Partners has nabbed $41 million of bridge financing to refinance a Hilton-branded Charlotte hotel property, Commercial Observer has learned.
Peachtree Group, formerly Stonehill, provided the floating-rate loan on Doradus’ 181-room Home2 Suites by Hilton Charlotte Uptown. Click here to read more.
.png)
.gif)
