Nuveen JV Closes $43M C-PACE Loan for Maryland Hotel

Plamondon Hospitality Partners has secured $43 million in C-PACE financing for the development of the Marriott Downtown Frederick at Carroll Creek, a 204-key, full-service hotel and conference center in downtown Frederick, Md.

Nuveen Green Capital originated the 30-year, fixed-rate financing, enabling the development team to access long-term private capital for permanently affixed energy efficiency and water conservation improvements.

The financing represents the largest C-PACE transaction in the state of Maryland. It was also the first transaction closed since Maryland Clean Energy Center assumed direct responsibility as the Maryland Property Assessed Clean Energy program administrator.

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The improvements financed through MDPACE include installing advanced insulation, roofing and windows to minimize thermal loss as well as using high-efficiency heating and cooling units. The hotel will also have full-interior LED lights to reduce electricity demand and advanced hot water systems and low-flow fixtures for water efficiency.

The features are projected to save more than 193,000 kilowatt-hours of electricity and 1.4 million gallons of water annually, reduce greenhouse gas emissions by 176 metric tons of carbon dioxide equivalent per year and deliver more than $2 million in life-cycle cost savings.

C-PACE grows more attractive

“C-PACE financing has seen meaningful growth in the hospitality sector in recent years, and it is one of our firm’s top-funded asset classes,” Ryan Doyle, Nuveen Green Capital senior director of originations, told Commercial Property Executive. “We’re continuing to see that momentum build.”

Doyle said hotel owners and developers are increasingly recognizing C-PACE as a highly efficient tool to capitalize their projects without eroding their senior debt capacity or tapping expensive mezzanine debt and equity.

“As construction costs and interest rates have remained elevated, sponsors are seeking creative capital solutions and C-PACE fills that gap in a compelling way,” Doyle said.

He said the record Maryland transaction “reflects both the scale that C-PACE can now achieve and the growing sophistication of hospitality developers in understanding how to deploy it effectively.”

C-PACE, which stands for Commercial Property Assessed Clean Energy, provides flexible financing for new, ongoing or recently completed commercial real estate projects. The financing can be used to fund energy efficiency, water conservation, renewable energy projects, resiliency projects and new developments. It is now available in 40 states and Washington, D.C.

Closer look at new hotel plans

Located on 2.2 acres at 20 South Carroll St., the new Marriott hotel will also offer more than 21,000 square feet of conference and event space, including a rooftop terrace and indoor-outdoor venues. The hotel will have two restaurants, including one with a bar on the rooftop terrace, and one along Carroll Creek. Plans also call for a lobby bar as well as grab-and-go coffee shop and market.

Plamondon, a family-owned hotel management and development company headquartered in Frederick, broke ground on the project in early February. It is slated for completion in 2027. It will be the only hotel and event facility in Frederick City and County capable of hosting large-scale conferences, business summits and major events.

The development is a public-private partnership with the public investment covering 26 percent of the total project cost. The State of Maryland is investing $23 million while Frederick County and City of Frederick are investing a combined $4.5 million.

The hotel and conference center is expected to create approximately 200 direct, indirect and induced jobs, as well as serve serve as a catalyst for more than $100 million in additional development in downtown Frederick.