C-PACE for Senior Lenders - Lone Star PACE

Efficiency upgrades are often deprioritized by commercial property owners due to high upfront costs and deferred payback. Commercial Property Assessed Clean Energy (C-PACE) removes these barriers by providing access to low-cost, long-term financing for sustainable building improvements that save energy and water while strengthening the overall capital stack.

Senior lender consent is required for all C-PACE transactions. As property owners look to alternative capital sources, it’s critical that senior mortgage holders understand and embrace this important financing tool. To date, more than 350 senior lenders have consented to C-PACE.

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Benefits for Senior Lenders

Low fixed rates and longer amortization periods; improved DSCR

Non-accelerating and non-recourse

Typically priced lower than senior debt

Very low levered; max 25% of appraised value

Assessment is tied to the property and may transfer automatically upon sale

Low-cost alternative to mezzanine debt or preferred equity

Senior lenders maintain all rights and remedies associated with loan agreement

Mitigated risk, as C-PACE assessments can be escrowed in the same manner as taxes or insurance

Increased value of lender collateral through improved IRR and cash flow

Appealing to environmentally conscious borrowers; helps win deals

Strong alternative to syndicate bank participation in the event of legal or relationship lending-limit constraint

Senior Lender FAQ

How is a C-PACE assessment secured?

C-PACE is secured through a voluntary tax assessment on the property over a term that matches the useful life of the improvements. Assessment terms tend to fall between 20 to 30 years.

What happens in the event of default or foreclosure?

If a property owner defaults on a C-PACE payment, only the current or past-due amount may be enforced in the same manner as a delinquent property tax. Unlike traditional financing, the entire C-PACE assessment does not accelerate. The outstanding balance remains due and transfers with the property upon sale, or may be paid off upon sale.

Does C-PACE impact a lenders’ ability to foreclose?

No, C-PACE does not interfere with a senior lender’s foreclosure process or their foreclosure rights. A senior lender still has all of its rights and remedies available.

Which senior lenders have consented to C-PACE?

More than 350 capital providers have consented to C-PACE to date. A nationwide list of consenting institutions can be found here.

Why should I consent to C-PACE?

There are many compelling reasons why a senior lender should consent to C-PACE financing. C-PACE can significantly improve the value of collateral by reducing a property’s operating costs and boosting NOI. C-PACE is generally priced lower than the senior debt and is very low-levered at max 25% of appraised value. The financing is non-recourse and non-accelerating, and the senior lender maintains all their rights and remedies associated with the loan agreement.

Questions?

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