CNBC | Another major player in the space (C-PACE Lending), Peachtree Group, closed its largest C-PACE deal, a $176.5 million loan for the Rio Hotel & Casino in Las Vegas, Nevada, for renovations that were actually completed in 2024. The loan was structured to finance these renovations retroactively, so the owners could reduce their senior loan obligations, another benefit of the C-PACE product.
“They can be utilized as a rescue capital mechanism, where you just recently opened a new development project, a new development hotel property, a multifamily property, any type of commercial real estate property, and you could technically do a retroactive C-PACE loan to help recapitalize that project and help pay down the bank or the lender that financed the project,” explained Greg Friedman, CEO of Peachtree Group.
Friedman said he sees C-PACE as an economic development tool at a time when “capital markets for commercial real estate have been broken.”
“Banks make up 50% of the commercial real estate lending market. Banks tend to be the lender of choice for new construction, new development projects, and they’re just not lending at the same level,” he said.
C-PACE is very profitable for Peachtree as a business, Friedman said, because the company can aggregate and securitize the loans.
“We have a lot of insurance companies that will invest into these securitizations,” he added.
While C-PACE lenders are less focused on the “green” aspects of the loan, they are still drawn in by the “resilience.”