C-PACE Financing for Commercial Real Estate
Long-term, fixed-rate, non-recourse capital for new development and major renovations, repaid via a special property assessment. Replace higher-cost mezz/pref, stabilize DSCR, and align tenor to useful life.
Availability and parameters vary by state/local program guidelines.
Why C-PACE
Lower Weighted Cost of Capital
Substitute lower-cost capital for mezz/pref to lift IRR and reduce dilution across the business plan.
Long-Term, Fixed-Rate
Match tenor to useful life; minimize refinancing risk and smooth DSCR through cycles.
Non-Recourse & Transferable
Assessment attaches to the property and may transfer at sale, supporting flexible exits.
Execution Simplicity
Senior lender acknowledgment replaces mezz intercreditor/SNDA complexity in many executions.
Retroactive Funding
Eligible completed projects may secure C-PACE within look-back windows (jurisdiction-specific).
Energy & Carbon Outcomes
Finance HVAC, envelope, lighting, renewables, storage—and, in some states, resilience upgrades.
How C-PACE Works
Scope & Eligibility
Identify qualifying measures and confirm state/local program fit and statutory guardrails.
Underwriting & Engineering
Energy analysis as required (e.g., SIR) to validate savings and compliance.
Program Approvals
Coordinate assessment documents with administering authority; senior lender acknowledgement obtained.
Funding
Proceeds fund at construction or close—displacing higher-cost tranches and easing equity draw.
Repayment
Assessment repaid via property tax bill over term; obligation runs with the land.
Eligibility & Qualified Improvements
Property Types
- Multifamily (5+ units)
- Industrial & Logistics
- Office & Medical
- Hospitality & Retail
- Owner-Occupied Commercial
Common Measures
- High-efficiency HVAC, boilers, GSHP
- Envelope (windows, roofing, insulation)
- Lighting & controls
- Renewables (solar), storage
- Resilience (state-specific)
Project Scenarios
- Ground-up development
- Major rehab / repositioning
- Retroactive financing (market-dependent)
Capital Stack Fit: Typically positioned between senior debt and common equity, improving coverage and lowering blended cost of capital.
Capital Stack Explorer
Equity auto-balances to keep total at 100%.
| Tranche | Percent | Amount |
|---|---|---|
| Senior Debt | 55% | $13,750,000 |
| C-PACE | 25% | $6,250,000 |
| Equity | 20% | $5,000,000 |
Illustrative only. Actual sizing depends on jurisdictional rules, engineering, underwriting, and senior lender parameters.
C-PACE FAQs
Is C-PACE a loan?
No. It is financed as a special property assessment recorded against the property and repaid via the tax bill; the obligation runs with the land.
How long are C-PACE terms?
Programs commonly allow long amortizations aligned to useful life—often up to ~30 years depending on jurisdiction.
How does this impact my senior lender?
The senior lender typically signs an acknowledgment of the assessment. Unlike mezz, C-PACE does not require an intercreditor or SNDA in many executions.
Can I use C-PACE for completed projects?
Many programs support retroactive funding for eligible improvements completed within a look-back window (varies by state).
What improvements qualify?
Energy efficiency, renewable generation, and certain resilience measures (state-specific), including HVAC, envelope, lighting, solar, storage, and in some markets seismic upgrades.
How do repayments work if I sell?
The assessment is tied to the property and can transfer to the next owner at sale, subject to buyer and lender requirements.
Are there energy savings tests?
Many states require documented savings thresholds or a Savings-to-Investment Ratio analysis supported by engineering review.