Bayview PACE has provided $7 million in C-PACE financing for the adaptive reuse of the Pocketbook Factory property in Hudson, N.Y., to transform it into a mixed-use hotel, wellness and cultural space.
Developed by a local investment partnership, the 70,000-square-foot, $42 million mixed-use development will be renamed as Pocketbook Hudson and comprise an owner-operated hospitality venture. The development will include a 40-room hotel, wellness center, restaurant, lounge bar and café. The hospitality business is expected to span approximately half the complex.
Other properties in the property will include a mix of locally-oriented art and design uses, retail space and not-for-profit offices.
Pocketbook Hudson is expected to benefit from the robust hotel, F&B and visitor trends in the area. As a smaller, supply-constrained hospitality market, Hudson’s hotels often record full occupancy, especially in the peak seasons, Bayview PACE said in a statement.
Although the 40-room hotel will increase the market’s room count by 10%, it will be returning the market to 2020 levels. Around 40-50 motels/limited-service hotel rooms closed during the pandemic to provide a residential development, Bayview PACE said.
Originally opened as a knitting mill, the historic factory was later used to manufacture garments, pocketbooks and luggage, which eventually gave it its “Pocketbook Factory” name. The factory had been lying vacant since the 1970s, before it was acquired in 2021 for a reported $3 million.
The C-PACE funding provides cost-effective terms for qualified improvements in energy, lighting, water systems, building envelope and other resiliency components; and it can be applied to new-build projects as well as renovations of existing structures.
“By utilizing EIC NY PACE, this project takes the City of Hudson a significant step towards sustainability, committing to innovative financing solutions that will reduce greenhouse gas emissions and foster a greener future for our community,” said Hudson Mayor Kamal Johnson.
Bayview worked with EIC Open C-PACE to close the C-PACE loan. EIC Open C-PACE is operated by Energy Improvement Corporation, a New York State non-profit local development corporation that provides long-term alternative financing to fund environmentally-friendly energy projects in commercially owned buildings for member municipalities, including counties and cities across New York State.
The project used a financing combination of C-PACE, tax credits and EB-5 financing, which also included a historic tax credit financing of $8.96 million and EB-5 debt totaling around $13 million being used for the construction financing.
The flexible and attractive terms of C-PACE financing proved to be a key benefit for Pocketbook Hudson, said Anne Hill of Bayview PACE. “Bayview PACE’s specialty in C-PACE and our experience in structuring hybrid combinations with other tools such as EB-5 and tax-credit financing are proving to be very attractive in today’s competitive financial markets. C-PACE financing provides borrowers ultimate flexibility, certainty of execution, and highly competitive terms.”
C-PACE fundings have exceeded $7 billion in the U.S., Bayview PACE said. It has been approved through legislations in 39 states and has been becoming popular among real estate owners and financial institutions.