Harnessing Relationships with Senior Lenders to Secure CPACE Financing

Because Commercial Property Assessed Clean Energy (CPACE) loans are billed as an assessment that takes priority over all first liens, a CPACE loan requires senior lenders to consent to it. Although senior lenders are becoming more familiar with CPACE and are therefore more willing to consent to the loan, many are still unaware of it. Educating a senior lender on the benefits of CPACE financing can be a nuanced process. Peachtree Group has longstanding relationships with most senior lenders and understands their concerns, as well as how to structure a deal with the highest chance of garnering consent.

Peachtree Group leveraged its vast network of senior lenders to secure a CPACE loan for the development of a five-story, 148-unit senior living facility with 6,893 square feet of leasable retail space located in Ridgefield, WA. Amenities for the facility include housekeeping, a lounge and fitness center, a golf simulator, a pool, billiards, and pickleball, as well as shuttle transport services.

The construction budget includes a total of $27.1MM in CPACE-eligible line items. The CPACE loan will fund $26.18MM of net CPACE proceeds, which will go toward the building envelope, HVAC, lighting, plumbing, covered processes, qualifying soft costs, and seismic improvements. The remainder is held as interest reserve for any overages.

The property sits within a large mixed-use master plan community that includes both commercial and residential uses. It is adjacent to a large, protected wetland and green space, offering stunning views. The location is a 15-minute drive from downtown Vancouver, WA, and a 30-minute drive from Portland, OR. Due to its rapid growth, Ridgefield has experienced significant real estate development, including new housing developments, apartments, and condominiums. The real estate market is generally characterized by relatively high demand, driven by the area’s attractiveness to families and professionals, as well as its proximity to Portland.

Census data reveals that the number of Americans aged 65 and older reached a staggering 55.8MM in 2020, accounting for 16.8% of the nation’s population. This surge in the aging population is the primary driver behind the increased demand for senior housing. Anticipation among area residents has been high since the initial announcement in July 2022.

To meet the growing demand, it is estimated that more than 800K additional units of senior housing will need to be added in the U.S. by 2030. Ridgefield has been one of the fastest-growing cities in Washington. Its population is diverse, including a significant number of families and young professionals. Overall, the location benefits from nearby attractions such as entertainment venues, retail stores, and wholesale markets, which cater to the preferences and convenience of the senior population.

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Peachtree Group is a senior bridge and construction lender that can provide CPACE financing on projects currently under construction or completed within the last 36 months. The program is available for all commercial real estate asset classes.

Learn more about CPACE financing or contact Peachtree's CPACE team.

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