Alaska, New Jersey, New York City, New Mexico, Hawaii, Michigan – what do they have in common? Newly updated C-PACE legislation. They have either newly passed legislation allowing for C-PACE financing or have expanded existing programs. And they’re not alone. To date, 38 states plus Washington, D.C. have passed PACE legislation. Among them, 33 have established programs for C-PACE funding. It may be time for you to build your understanding of this powerful financing option.
Commercial Property Assessed Clean Energy (C-PACE) is a financing tool for developers to borrow money to fund energy and water efficiency, renewable energy, or resiliency measures, and pay it back as a voluntary assessment on their property tax bill. PACE is a long-term, low-rate, non-recourse funding option. The assessment on the property tax bill ties the funding to the property, making it easily transferable with property sale.
THE VALUE OF C-PACE FINANCING
C-PACE financing has become an increasingly mainstream funding option. Why? The benefits speak for themselves.
- The lower rates offered through PACE Equity financing increase the project’s internal rate of return.
- Project improvements improve the Net Operating Income and property value.
- PACE Equity replaces more expensive options such as mezzanine financing or outside equity.
- PACE Equity makes the whole experience simple and straightforward.
Concerned about navigating the process to secure PACE funding? Don’t be.
“Since this was our first experience with PACE financing, we had some concerns around receiving the necessary approvals and timing. But PACE Equity managed the entire process and made it very easy on our team.”
Michael DiCarlantonio, VP, Wallick Communities
THE STORY OF C-PACE FINANCING
C-PACE programs first started to gain traction around the country in 2009 as a novel and niche option for financing. In 2010, Scientific American named an early version of PACE a “World Changing Idea.” Since 2010, the C-PACE industry has increased in total funding by over $5 Billion and is expected to exceed $15 Billion by 2025. One big reason for this explosive growth is the expansion of C-PACE availability across the country.
Energy efficiency and sustainable building practices are the present and future of commercial real estate. Improvements in technology such as LED lighting have made energy efficiency the clear choice for fiscally-conscious developers and C-PACE is the ideal tool to fund this type of measure. The numbers agree – the C-PACE industry has been growing at a 57% Compound Annual Growth Rate (CAGR) from 2018 to 2022, and Morgan Stanley predicts a 40% CAGR through 2025. Now is the time to embrace C-PACE financing and take advantage of lower cost financing and improved weighted average capital costs.
PACE Equity is the leading funder of C-PACE development projects. As C-PACE grows, so do we. Our local Managing Directors know your real estate market and can help you fill a gap in your capital stack.
Schedule time with your Managing Director today.