Lever Energy Capital closed $4.6 million in Commercial Property Assessed Clean Energy (C-PACE) financing to revive the century-old Blackstone Hotel in the Blackstone District of Omaha, Nebraska.
Originated in partnership with PACE Sage Capital, the project marks Lever’s first commercial real estate financing in Nebraska. Omaha-based development firms Clarity Development Company and GreenSlate Development realized the value of low-cost C-PACE financing in putting together a total capital stack of $70 million to redevelop the hotel.
“This is a great example of how commercial real estate developers can leverage C-PACE alongside traditional debt, equity, TIF and tax-credit financing to improve project economics and transform older buildings into more efficient assets,” said Mark Boyer, president of Lever Energy Capital, in a statement.
Clarity and GreenStreet will convert the 100,000-square-foot building and 46,000-square-foot addition into a 205-room hotel with multiple restaurants, a cocktail lounge, conference center, ballrooms, pool and fitness center.
Built in 1916, the Blackstone Hotel was once Omaha’s most prestigious luxury hotel. In 1984, the buildng was converted to an office space, most recently serving as part of the headquarters of Kiewit Corporation. In 2018, the development team purchased the building to return it to its original use as a hotel. The new Blackstone Hotel will open in the spring of 2020.
Lever’s C-PACE funds will help reduce the hotel’s operating expenses by financing upgrades to building components such as lighting, heating and cooling units, windows and building controls. These improvements are expected to generate $116,000 in annual utility savings and more than $4.1 million in total utility savings over the financing’s 23-year term. The savings and revenue associated with Lever’s C-PACE financing will pay for and ultimately exceed the financing payments, increasing the property’s value by an estimated $1.5 million.
Nebraska passed C-PACE legislation in 2015, allowing municipalities to create local C-PACE prgrams that provide low-cost financing to real estate owners making energy efficiency, renewable energy and water conservation upgrades.