X-Caliber Funding (X-Caliber), a national, direct commercial real estate lender, and CastleGreen Finance, an affiliate company that provides capital focused on Commercial Property Assessed Clean Energy (C-PACE) financing, have closed on a $94 million joint transaction as part of a multimillion-dollar renovation to reopen the Long Beach, California landmark Breakers Hotel & Spa. The funding was comprised of a renovation loan and C-PACE financing, making it the largest financing of a single asset under the program in the state of California.
The X-Caliber/CastleGreen team executed the one-stop transaction providing $48.5 million in first mortgage, renovation financing and $45.5 million in C-PACE financing through the California Statewide Communities Development Authority’s (CSCDA) Open PACE Program. The Open PACE Program provides property owners funding to finance improvements that include energy efficiency, renewable energy, water conservation and seismic improvements while leveraging contractor networks in California communities. The unique PACE financing is only administered through C-PACE approved lenders and allows borrowers to pay it back over time through a voluntary tax assessment that provides a longer-term, lower-cost financing option coupled with the ability to transfer repayment to the next owner.
The $94 million in financing is part of a $167 million project led by Pacific6 Enterprises, a Long Beach, California partnership, led by John Molina, who purchased the Long Beach Breakers Hotel & Spa in 2017. The firm focuses on projects that bring positive economic and social advancement to their local communities. The property is planned to reopen as a boutique hotel in the first quarter of 2023 and will feature 185 guest rooms, a rooftop pool, several restaurants and a renovation of the Sky Room.
“This was our first joint transaction with our affiliate company, CastleGreen, and we were excited to combine our unique capabilities through the C-PACE program to help Pacific6 execute their vision of bringing this hotel back to life while providing more than 220 jobs and significant economic stimulation to vibrant downtown Long Beach,” said Chris Callahan, president and CEO of X-Caliber. “X-Caliber is committed to providing our clients with the best possible solutions for their business goals and we instantly fell in love with the vision for the Breakers Hotel. Our team of experts understood the needs of our friends at Pacific6, and we were pleased to provide a one-stop financing solution for this transformational and impactful initiative.”
The financing will not only provide borrowers with longer-term, lower-cost financing, but it will significantly reduce greenhouse gas emissions at the rate of an estimated 247.2 metric tons of carbon dioxide per year. The C-PACE financing required improvements for this project are estimated to reduce annual greenhouse gas emissions by eliminating the equivalent to 273,800 pounds of burned coal and avoiding 84.3 tons of waste that will be recycled instead of landfilled. These are two of nearly two dozen examples of CO2 reduction that are a direct result of the C-PACE financing for the Breakers Hotel and Spa.
“The CastleGreen team was very proud to work with its partner at X-Caliber to help the Pacific6 team bring this historic asset back to its grandeur of the early 20th century,” said Sal Tarsia, managing partner of CastleGreen. “It was a pleasure to bring all of the elements available in the CSCDA Open PACE Program to help benefit Pacific6, a firm truly engaged in the restoration and positive environmental impact of its community.”
Berkadia’s Matt Raptosh, managing director, arranged the transaction financing.
The 14-story Breakers hotel, which is among the oldest buildings in Long Beach, was built in 1926 and has a star-studded history of hosting guests such as John Wayne, Clark Gable, Cary Grant and Elizabeth Taylor. It is within walking distance to many of Long Beach’s notable features, including the Convention and Entertainment Center, the restaurant district, the Aquarium and the Long Beach Cruise Terminal. The hotel closed in 1988 and most recently operated as an assistant living facility. The new Breakers Hotel and Spa is projected to reopen in the first quarter 2023.
