2B — February 2025 — Owners, Developers & Managers — M id A tlantic Real Estate Journal
www.marej.com
O wners , D evelopers & M anagers
By Stephen Arrivello, PACE Equity LLC Unlocking capital for development: The power of C-PACE financing in a tight credit market
ackground on C- PACE Financing Commercial Property Assessed Clean Energy (C- PACE) financing is increas- ingly being recognized as a critical tool for commercial real estate owners and developers navigating today’s challeng- ing credit environment. With traditional financing sources tightening and interest rates rising, securing capital for construction and renovation projects has become more dif- ficult. C-PACE provides an alternative source of long- term, low-cost financing, repaid B
through a special assessment on the property’s tax bill. Adopted in most states and the District of Columbia, C- PACE helps developers secure much-needed capital while pre - serving liquidity and reducing reliance on costly mezzanine debt or equity. The financing is non-recourse, provides up to 100% of eligible project costs, and remains with the property upon sale or transfer, making it an attractive option for owners, investors, and lenders looking to complete projects in a con- strained financial environment. Value Proposition for Developers and Real Estate Investors For commercial building owners, developers, and real estate advisors—including attorneys, architects, and finance professionals—C- PACE financing presents significant advantages: Alternative Capital Source in a Tight Credit Market C-PACE fills financing gaps created by cautious banks and expensive private lenders. Reduces Need for Expensive Equity and Mezzanine Debt With interest rates rising, C- PACE provides long-term, fixed- rate financing at lower costs than traditional secondary debt. Developers can layer C- PACE financing into their proj - ects to lower their weighted av- erage cost of capital (WACC). Longer Repayment Terms with Fixed Rates C-PACE terms extend up to 30 years, providing more man- ageable repayment structures compared to traditional loans. Preserves Developer Liquidity With C-PACE covering key project costs, developers can allocate capital to other critical needs instead of tying up funds in construction expenses. Applications of C-PACE New Construction, Renovations, and Redevelopments C-PACE financing is particu - larly valuable for developers struggling to secure funding for various real estate projects: New Construction – With banks pulling back on com - mercial real estate lending, developers are turning to C- PACE to finance a portion of hard and soft costs, reducing continued on page 10B Improves Capital Stack Efficiency
Flexible Capital Solutions for Commercial Real Estate Projects ACCOMPLISH MORE
Stephen Arrivello sarrivello@pace-equity.com
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