Press Release | Oct 31, 2018
178-room hotel uses innovative C-PACE financing
for energy, lighting and water systems
Rochester, MN and Sausalito, CA — CleanFund, the leading nationwide provider of Commercial Property Assessed Clean Energy (C-PACE) financing, announced today closing $2.5 million in C-PACE funding for a 178-room Hotel Indigo at 220 S. Broadway in downtown Rochester, MN. The hotel is undertaking a $20 million rehab-redesign of a former Holiday Inn to create a fully modernized, amenity-laden Hotel Indigo. The attractive financing package delivered by CleanFund included a 20-year term and a rate significantly lower than alternative capital. With CleanFund’s financing enabling a lower cost of capital, the redevelopment project was able to include the ‘green’ attributes that today’s hospitality guests demand, such as energy-efficient HVAC, upgraded windows for efficiency and sound proofing, and LED lighting along with low-flow water fixtures.
“Once CleanFund educated us on C-PACE, it was just a matter of selecting our first project. We view C-PACE as a valuable financing tool that complements our other sources of capital,” said Jason Bass, Director of Finance at EKN Development Group, the lead member of the project joint venture. Newport Beach, CA-based EKN has over 1,500 hotel rooms currently under development including properties in Minnesota, San Francisco, Monterey and Italy. “CleanFund's C-PACE financing lowered our weighted average cost of capital for the overall project and allowed us avoid any value-engineering that can sometimes pressure a project to cut back on green attributes. No doubt, it’s a better building with C-PACE.”
“More and more hospitality and mixed-use projects are integrating C-PACE financing as part of their overall capital strategy as companies like EKN see the benefits to their bottom line and for their properties’ guests and tenants,” said Chris Robbins, Managing Director of Sausalito, CA-based CleanFund.
Another innovative aspect of this transaction is that the C-PACE funding was able to be utilized for a multi-use property operating under a Home Owner Association (HOA) structure. The C-PACE improvements will provide primary benefits to the Hotel Indigo but also to separately-owned condominium-office spaces on the ground floor and upper-floor residential condominium homes.
With an opening date planned in mid-2019, the new Hotel Indigo will accommodate business, leisure and family travelers. Other improvements related to the redevelopment project include a completely redesigned and renovated main lobby, pool, common areas, and all the hotel rooms.
C-PACE financing, first introduced in 2008, is a form of voluntary parcel tax assessment financing to fund qualifying improvements that reduce energy and water usage, and that provide seismic and other resiliency benefits to the built environment.
About EKN Development Group
EKN Development Group is a real estate development firm specializing in hospitality, mixed-use and high-density residential development. EKN aims to deliver above market risk-adjusted returns to its investors through the broad offerings of its diversified and premier project portfolio. Visit EKN at http://www.ekndevgroup.com.