Exterior rendering of the Sheridan at Severna Park
The MD-PACE program is pleased to announce that Q3 of 2021 concluded with the approval of a large-scale new construction C-PACE project in Anne Arundel County. At the end of September, the MD-PACE program approved C-PACE financing for the development of The Sheridan at Severna Park, located at 134 Ritchie Hwy in Severna Park, MD. The Maryland Clean Energy Center (MCEC) facilitated the transaction with prominent real estate developers Kaufman Jacobs and Senior Lifestyle, and Greenworks Lending from Nuveen, one of the country’s preeminent C-PACE providers. The total amount of C-PACE financing provided is the largest ever for the MD-PACE program, at $17.2 MM. Once finished, The Sheridan at Severna Park, will serve as an independent living and memory care facility for the senior citizens, addressing a vital local need. Katherine Magruder, Executive Director of MCEC, shares,
MCEC is proud to facilitate the transaction between developers Kaufman Jacobs and Senior Lifestyle, and C-PACE financing firm, Greenworks Lending from Nuveen. Through the MD-PACE program, $17.2 MM of C-PACE will be used to create a facility that will support a high standard of both elder care and energy efficiency.
The central appeal for using C-PACE for this ground-up construction project was its lower cost compared to equity financing which has a significantly higher cost of capital. The practice of substituting more costly capital with C-PACE for construction projects is growing in popularity, as preferred equity and mezzanine debt are typically twice as expensive which can hinder the financial viability of development projects. The energy efficiency that C-PACE-funded measures can unlock aligns with the values of the Sheridan at Severna Park’s developers. Jay Patel, Vice President Acquisitions for Kaufman Jacobs, said regarding the C-PACE financing experience,
Greenworks Lending from Nuveen was a valued construction financing partner for this development project. Their expertise in C-PACE financing and ability to successfully close alongside traditional capital sources provided compelling returns for our project. We look forward to working with them on future development projects and appreciate their focus on enhancing energy efficiency.
C-PACE financing comprised 34% of the capital stack and combined with the senior loan provided by Capital Funding Group to achieve a compelling 90% LTC for the project. After a successful close, the development team expressed satisfaction at how their financial partners contributed to the capital stack for the project. Sharing his perspective of the deal, Robert Gawronski, Vice President of Development & Acquisitions at Senior Lifestyle Corporation, said,
Working with Greenworks Lending from Nuveen on The Sheridan at Severna Park project was a great experience. Their team was flexible, creative, and exceeded our expectations in providing tailored cost-efficient financing to our project. We would highly recommend Greenworks to our development partners.
Representing Greenworks Lending from Nuveen, Director of C-PACE Originations Michael Billingsley remarked that,
It was a pleasure partnering with the Kaufman Jacobs and Senior Lifestyle development teams on this exciting project. Their passion for creating vibrant, healthy, and energy efficient senior living communities was evident in the design and construction of The Sheridan at Severna Park development. Capital Funding Group was an excellent construction financing partner and worked diligently with Greenworks Lending from Nuveen to deliver a top-notch combined capital stack for the project’s Sponsorship.
Interior rendering of the Sheridan at Severna Park
The construction of The Sheridan at Severna Park is a massive undertaking, building from the ground up a nearly 100,000 square foot, state of the art residential and memory care facility. Principle construction is being undertaken by Brinkmann Constructors. Measures that will be financed with C-PACE include LED lighting, exterior walls and windows, gas condensing hot water heaters, packaged variable air volume (VAV) air heating systems, and elevators.
In a project of this size, balancing the benefit of energy efficient measures with the cost of construction is imperative. C-PACE financing can help to successfully balance the scales. For example, inefficient and cheaper windows would have leeched heat in the winter and overheated interior spaces in the summer. Balancing the scales of energy efficiency and project cost efficiency low cost C-PACE financing enabled the developers of the Sheridan at Severna Park project to incorporate high quality windows into their development that exceeded the IECC 2018 code for new construction.
The Sheridan at Severna Park project is the first property financed within the MD-PACE program that will be used for an independent living and memory care facility. This is significant for two reasons. A report by the Maryland Department of Aging projects that by 2040, more than 25% of the state’s population will be 60 and that individuals between the ages of 80-84 are the quickest growing segment of the population. This growth necessitates the development of senior living and healthcare facilities within the state of Maryland. Additionally, as a property type, residential care facilities have intensive energy requirements, which can quickly inflate utility costs. By investing in energy efficiency measures, these properties can avoid sacrificing profits to operating costs. By reducing the traditionally high energy consumption of senior living facilities, The Sheridan at Severna Park and projects like it in the future will put less strain on the area’s energy grid than they would otherwise, helping to facilitate a more resilient Maryland.
