C-PACE: The multifaceted financing tool

C-PACE: The multifaceted financing tool

More than just green: Three timely solutions C-PACE is providing to the industry

While Commercial Property Assessed Clean Energy (C-PACE) financing is widely recognized for its environmental impact and attractive financing terms, its value extends significantly beyond sustainability. In the face of unrelenting uncertainty in the CRE market, C-PACE continues to serve as a multifaceted financing solution for numerous reasons, including its attractive low-cost, long-term, fixed-rate parameters, as well as its flexibility to fit the needs of Sponsors and their projects at various stages of construction.

The C-PACE market has grown rapidly over the last few years as a result of its attractive terms and sustainable impact, but it’s also in part due to persisting economic disruption, as well as the need for a more resilient built environment. This has brought to light three lesser known, but compelling, reasons why owners and developers are turning to C-PACE: its use as efficient mid- and post-construction capital, bridging projects to completion; its ability to fund resiliency measures; as well as its ability to act as a driver for economic development.

C-PACE as stabilizing capital in times of volatility

mid-construction capital

As owners and developers with projects underway face a tight credit market, many are seeking financing options to bridge their projects to completion. C-PACE provides low-cost financing at a fixed rate, which owners and developers can access as additional working capital, in both shorter- and longer- terms during their project’s construction to fund cost overruns or interest reserve deficits while eliminating or reducing the need for an additional equity injection.

post-construction capital

In addition to financing projects mid-construction, C-PACE can also be used as a tool for recapitalization post-completion (up to three years in most states). The generous look-back period is particularly attractive for property owners as they can deploy C-PACE proceeds to pay down or restructure existing debt, fund construction cost overruns, and replenish their operating reserves. C-PACE also offers borrowers the option to delay payments up to three years.

With an increasing number of owners and developers becoming aware of C-PACE’s attractive benefits to finance their projects mid- and post- construction, NGC has seen an uptick in demand for C-PACE capital to finance projects that are mid-stream or recently completed- across regions and asset classes. This has enabled numerous projects to reach stabilization.

Case study: C-PACE financing mid-construction – the iM Critical Data Center, Miami, FL

Formerly a BellSouth facility, the iM Critical Miami Data Center in Miami is undergoing an extensive repositioning to modernize its retail colocation infrastructure. NGC partnered with iM to provide $32.6 million in C-PACE financing to fund the data center’s modernization. Through the strategic use of C-PACE, iM was able to refinance the project mid-construction to secure favorable financing terms, ultimately enabling the project’s completion.

Building for a Changing Climate: C-PACE financing for resilience measures

With climate-related weather events on the rise and expected to continue for the foreseeable future, owners and developers are compelled, and often required, to invest in resilience measures. Resilience measures are crucial to protect buildings and tenants from extreme weather and seismic events - particularly those that are located in hurricane and earthquake prone areas.

Investment in these measures has become a mainstay of most construction projects — but because it can be expensive, many resourceful owners and developers have turned to C-PACE’s cost-effective financing. Depending on the state, C-PACE can finance numerous resilience measures, including wind and flood resiliency, foundation strengthening and connection systems, seismic bracing systems, high impact doors and windows, as well as masonry and roof to wall reinforcements.

By utilizing C-PACE to finance these critical measures, owners and developers can realize significant savings, while ensuring that their properties can withstand and recover from unexpected weather events and natural disasters.

According to the U.S. Chamber of Commerce, every $1 invested in resilience saves $13 in economic damage and repair costs.¹ In 2024, C-PACE financing supported the design and construction of resilient buildings with a focus on earthquake hardening and storm, wind and floodwater resiliency.²

Case study: C-PACE for resilience measures – new Marriott Hotel, Anchorage, AK
NGC partnered with Northrim Bank on a $39 million financing package for a new Marriott hotel in Anchorage, Alaska. The creative use of C-PACE eliminated the need for Northrim to bring in additional bank participants to the capital stack. In addition to funding the hotel’s energy efficiency and water conservation measures, which will enable the hotel to lower operating costs, C-PACE was also utilized to finance seismic resilience measures. Seismic resilience measures are particularly crucial due to the frequency of earthquakes in Alaska, which is known to be the most seismically active state in the U.S.

C-PACE as a driver for economic development

C-PACE capital comes at 0 cost to communities and taxpayers, while providing property owners and developers with low-cost, fixed-rate, stable capital to finance their projects. C-PACE enables owners and developers to build energy efficient buildings, lower operating costs, while also allowing them to address tenant demand for sustainable buildings.

Beyond this, as C-PACE can aid projects in moving forward that may otherwise not have been able to, the surrounding communities and local economies are positively impacted through the creation of jobs — an estimated 270k+ jobs have been created to date industry-wide — the expansion and development of underdeveloped areas, and in the rehabilitation of vacant or dilapidated buildings.

Case study: C-PACE driving economic development – rehabilitation of Tivoli Theatre, Chattanooga, TN

NGC partnered with Reinvestment Fund, Inc. on a $73.4 million construction financing package for the gut renovation of the historic Tivoli Theatre and Performing Arts Center in Chattanooga, TN. By leveraging C-PACE capital in conjunction with New Market Tax Credits and Historic Tax Credits, the Sponsor was able to fully capitalize the project and revitalize the iconic theater, which is part of Chattanooga’s cultural fabric, while creating an estimated 200+ jobs — bolstering the city’s economic development.

In 2024, NGC’s C-PACE financing supported the construction and rehabilitation of green and historic structures, multifamily housing, affordable housing and job creation, resulting in the creation of 2.1k housing units, 67 affordable units, and the creation of 20.4k jobs.³

C-PACE financing continues to provide the commercial real estate industry with reasons to turn to it. C-PACE is more than just a financing tool for sustainability; it's a strategic solution for navigating the complexities of the current CRE market. Its flexibility, cost-efficiency, and ability to address diverse project needs make it an indispensable resource for owners and developers seeking to thrive in a challenging environment.

To learn more about how C-PACE is revolutionizing the commercial real estate finance industry, visit: https://www.nuveen.com/greencapital/get-started-with-c-pace