Commercial Property Assessed Clean Energy (C-PACE) is an innovative financing program that is gaining popularity across the U.S., as it offers a low-cost, long-term capital solution that doesn't require upfront equity from property owners. The central appeal for using this program for energy-efficient upgrades and retrofits is that any level of C-PACE used will lower the overall cost of capital compared to mezzanine, third-party equity, or even many senior loans. This is impactful for commercial property developers.
In the current market, the cost of capital has increased significantly, along with higher interest rates and wider spreads from lenders. In addition, higher financing costs put pressure on loan-to-value (LTV), loan-to-cost (LTC) ratios, and the amount of capital lenders are willing to provide, reducing liquidity for new developments. Construction costs have also increased significantly with back-to-back years of double-digit increases, with further increases in 2023 as CBRE expects a growth of 5.4% for construction costs.
C-PACE is in heavy demand because it's a fixed-rate product, starting in the mid-single digits. It also can be up to 35% of the capital stack. With a typical senior loan at 65% loan-to-value, providing C-PACE at 30% of the stack, the lender becomes below 40%, lessening its capital risk. As a result, it is helping development projects across all real estate sectors pencil to start construction and those in mid-construction reach get completed.
Today we see more requests for this financing as budgets are blowing out with cost overruns. C-PACE provides the needed capital when the developer cannot offer additional equity or banks are unwilling. The following are examples of mid-construction projects that utilized C-PACE funding from Peachtree to bring projects across the finish line:
If you want to dive deeper into C-PACE, here are some resources:
Article Originally Featured in HotelBusiness.com
As the commercial real estate lending environment continues evolving in response to economic pressures and shifting borrower needs, CPACE (Commercial Property Assessed Clean Energy) financing is becoming more prominent, with projections of it surpassing $10 billion in cumulative investments this year. According to Peachtree Group, a leading hospitality and commercial real estate financier, CPACE originations for the firm are expected to increase by 15–25% this year, marking another strong year for this creative financing solution.
This projected growth is fueled by legislative momentum, borrower demand for capital flexibility and gaps in traditional lending. CPACE programs, long supported by energy efficiency and sustainability goals, are seeing broader market adoption.
As more states implement or expand CPACE legislation, borrowers will have increasing access to a financing option—currently available in 40 states and the District of Columbia—that offers long-term, fixed-rate, fully assumable debt, a rare combination in today’s higher-rate environment.
Banks' tightening of construction lending has created a gap in the capital stack, and CPACE is emerging as a critical tool to bridge that gap with flexible, borrower-friendly terms. Hotel developers, in particular, are leveraging CPACE to offset rising construction costs and inflationary pressures. Whether for ground-up development or major renovations, the program provides a cost-effective alternative that aligns with the longer lifecycle of hospitality assets. Importantly, firms like Peachtree Group are now bundling CPACE with senior loans to provide a seamless financing solution that simplifies deal structures and accelerates timelines.
An emerging trend gaining traction among hotel owners is the use of retroactive CPACE financing.
While CPACE is typically arranged before construction begins, retroactive CPACE allows eligible property owners to secure this funding after a project is completed—sometimes even years later. The allowable "look-back" period varies by state but generally ranges from two to three years. This form of financing is proving especially valuable for owners by providing lower-cost liquidity and enhancing cash flow on projects that were initially funded through traditional means.
A recent example is the Hilton Garden Inn in Davis, Calif., which underwent a renovation in 2019. Peachtree Group originated the retroactive CPACE financing, and the proceeds were used to pay down the senior loan and fund the buildout of a fitness studio attached to the hotel.
As awareness of retroactive CPACE grows, more borrowers are expected to revisit previously completed projects to unlock capital, improve balance sheets or reinvest in future developments.
In a macroeconomic environment still marked by persistent high interest rates and cautious bank lending, CPACE's fixed-rate, non-recourse nature stands out. As more stakeholders, including municipalities, developers, and capital providers, embrace CPACE's flexibility and stability, its role in reshaping commercial real estate finance will only deepen. For hotel developers and owners looking to navigate today's complex capital markets, CPACE isn't just an option, it's a strategic advantage.
Peachtree Group is a direct balance sheet lender focused on funding first mortgage bridge loans, mezzanine loans, preferred equity investments, and commercial property assessed clean energy (CPACE) financing. Jared Schlosser is responsible for Peachtree's hotel originations platform and its CPACE program.
ATLANTA (June 26, 2025) – Peachtree Group ("Peachtree"), a leading commercial real estate investment firm, has promoted Jared Schlosser to head of originations for all commercial real estate and hotel lending, in addition to continuing his role as head of the firm's Commercial Property Assessed Clean Energy ("CPACE") lending program.
"Jared's promotion is a direct reflection of the momentum we're seeing across our credit platform," said Daniel Siegel, president and principal CRE at Peachtree. "Jared's leadership in CPACE and his broader origination experience make him the ideal choice to lead this next phase of growth."
Schlosser will work alongside Siegel, who joined Peachtree in 2022 to expand its credit platform and has since originated nearly $1.5 billion in commercial real estate loans.
"As Peachtree grows into a leading provider of private credit across commercial real estate, we're strengthening the team and centralizing our origination efforts to better serve sponsors across the capital stack," said Greg Friedman, managing principal and CEO of Peachtree. "Jared has consistently demonstrated strong leadership, and this expanded role positions him to help us scale our platform and deepen our impact across commercial real estate."
In 2024, Peachtree originated $1.6 billion in hotel and commercial real estate loans, ranking seventh among investor-driven lenders in the U.S., according to the Mortgage Bankers Association. The firm is on track to surpass $2.0 billion in originations in 2025.
"It's been incredibly rewarding to help build our lending platform during a pivotal time for the industry," Schlosser said. "I'm honored to take on this new role and look forward to working with our talented team as we continue to expand our reach, deliver creative capital solutions and build on the momentum we've created across asset classes."
Peachtree Group has originated a $51.5MM CPACE (30-year term) loan on a 224-unit townhome development in the Vinedo Community of Paso Robles, CA. The Reserve is part of the 279-acre master-planned Vinedo community, which, at full build-out, will contain ~1,425 total homes. The CPACE loan will fund the building envelope, HVAC, lighting, solar PV, plumbing, seismic improvements, and qualifying soft costs as the eligible costs are incurred during the construction process. The sponsor, Adam Tancredi comes from a 70-year-old family legacy of homebuilding and has over 17 years in the real estate development industry with an emphasis on both residential and commercial developments.
