In today’s complex capital markets, savvy financial professionals are seeking creative ways to fill funding gaps, manage risk and maximize returns on their projects. One increasingly popular tool that checks all of these boxes is Commercial Property Assessed Clean Energy (C-PACE) financing.
C-PACE provides long-term, fixed-rate capital for energy efficiency, water conservation and renewable energy improvements. Structured as a voluntary property assessment, C-PACE can cover up to 35% of a project’s funding, with repayment terms of up to 30 years. It’s a powerful mechanism that aligns sustainability goals with sound financial strategy, which is why smart developers, owners and investors are increasingly using it to enhance their capital stacks.
Filling the Capital Stack Efficiently
With interest rates remaining elevated and traditional debt harder to secure, many projects struggle to pencil without additional capital. C-PACE can step in to fund critical improvements such as HVAC systems, roofing, windows, plumbing or solar installations, reducing the need for expensive mezzanine debt or equity. Because repayment is tied to the property, not the borrower, C-PACE frees up liquidity and improves asset value while stabilizing the overall financing structure.
Reducing Operating Costs and Increasing NOI
C-PACE isn’t just about getting projects built — it’s about ensuring they perform better over the long term. Improvements financed with C-PACE directly lower utility bills and reduce maintenance expenses. For owners, this means higher net operating income (NOI) and stronger valuations. For lenders, it means healthier borrowers with more resilient assets.
Mitigating Risk for Lenders and Owners
A common misconception is that C-PACE jeopardizes the senior lender’s position. In reality, every C-PACE deal requires written consent from the senior mortgage holder. Assessments are structured so that only past-due payments have priority — the remaining C-PACE loan remains as an assessment on the property for the next owner unless repaid as part of a sale or restructuring.
Additionally, C-PACE financing often has generous capitalized interest and interest-only periods, which senior lenders and developers find attractive during construction and stabilization. This built-in protection, combined with the property-level lien, makes C-PACE one of the lowest-risk forms of financing in commercial real estate.
Aligning with ESG and Market Demand
Institutional investors and corporate tenants are increasingly prioritizing sustainability. Properties that demonstrate energy savings and resiliency are more attractive in the marketplace. By leveraging C-PACE, financial professionals can address ESG requirements while improving their competitive positioning. C-PACE can also be easily layered with tax credits or incentives, such as Opportunity Zones and New Markets Tax Credits.
A Smarter Path Forward
At its core, C-PACE is about aligning financial prudence with forward-looking investment. Projects financed through C-PACE deliver immediate and long-term benefits: reduced upfront costs, stabilized cash flows, stronger asset value and measurable sustainability outcomes.
For financial professionals tasked with delivering both profitability and resilience, C-PACE is more than an alternative financing option — it’s a strategic advantage.
If you’re exploring new development, retrofit, or recapitalization opportunities, now is the time to consider how C-PACE can enhance your capital stack and strengthen your investment. Contact Lone Star PACE today.