Commercial Observer Features Ethan Elser on C-PACE Flexibility in the Capital Stack
C-PACE financing has rapidly evolved into one of the most versatile tools in the capital stack. With high interest rates, rising construction costs, and nearly $1 trillion in debt maturities this year, sponsors are turning to a variety of sources to make projects work. Over the past decade, C-PACE has funded more than $10 billion across thousands of projects, with more than $2.5 billion completed in 2024 alone. The steady increase in both deal size and volume reflects a market that increasingly views C-PACE as a mainstream method to solve capital stack challenges.
As Ethan Elser, Executive Vice President at PACE Equity, explains: “As the market has matured, sponsors are increasingly understanding that the same advantages that make C-PACE valuable in smaller projects — increased leverage, the nonrecourse structure, and a lower cost of capital — are just as compelling in larger ones,” Elser said. “That shift in thinking has opened the door to bigger, more impactful deals, and it’s why we’ve launched a solution to meet the demands of projects needing more than $50 million of C-PACE financing.”
This new financing solution is tailored to meet the needs of larger developments and recapitalizations. With fixed interest rates, payment deferrals for up to four years, and the flexibility developers need to complete construction, stabilize assets, and execute business plans, PACE Equity’s solution can fund at pre-construction, during construction, or up to 3 years after certificate of occupancy. The funds can be deployed not only as development capital but also to recapitalize assets – paying down or paying off debt or mezz, replenishing or increasing reserves, or extending the runway to stabilization or exit.
“C-PACE is a way to solve challenges,” said Ethan Elser. “If a project needs more leverage or a blend of lower-cost capital compared to a stretch senior, C-PACE can fill that need at a lower cost than mezzanine debt or equity, while allowing the senior lender to maintain their client relationship and execute the deal. C-PACE can make the economics feasible in today’s market, something every sponsor is contending with.”