Innovative commercial developers and property owners have learned the benefits of C-PACE financing to fill the gap in their capital stack or replace more expensive forms of capital. C-PACE can significantly impact lowering a borrower's weighted average cost of capital.
Unlike traditional financing, C-PACE is repaid through a property tax assessment, providing long-term, fixed-rate financing without requiring upfront capital. This structure allows owners to undertake substantial property improvements that reduce operating costs and enhance property values.
The benefits extend beyond immediate financial relief; by lowering energy costs, C-PACE-financed upgrades can significantly improve a property's bottom line over time.
A standout feature of C-PACE financing that is relatively less known is its ability to be applied retroactively.
Retroactive C-PACE operates similarly to standard pre-project funding, with the key advantage that 100% of the loan proceeds can reimburse property owners for costs already incurred. This is particularly beneficial for hotel owners who have recently completed upgrades or energy-efficient projects and are looking to improve cash flow or refinance existing loans on better terms.
C-PACE offers other compelling benefits, such as:
- Non-recourse and transferable
- Low-cost alternative to mezzanine debt or equity starting at 7.0%
- No principal repayment required upon sale
- Funding for up to 35% of the appraised property value (varies by state)
- Funding for up to a combined LTV of 95% (CPACE + senior)
- Up to 30-year fixed-rate funding
- Ability to delay first payment until after stabilization (up to three years after the funding date)
- CPACE payments are secured by the property and are repaid through a special tax assessment
- Ability to pass through tax assessment to tenants or hotel guests
Learn more about C-PACE Financing or contact the Peachtree C-PACE team.
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The following is an example of a capital stack using C-PACE.
