Top 5 Ways
C-PACE Was Used in 2025 and What to Expect in 2026

The commercial real estate finance world has grown increasingly sophisticated in its understanding of C-PACE, and 2025 reflected that maturity in meaningful ways. Sponsors, lenders, and other stakeholders have moved well past the foundational question of where C-PACE can be deployed — on ground-up construction, renovation, or stabilized assets — and are now asking the far more important question: how do you actually use it to optimize a capital stack? The most compelling stories from 2025 aren't about project type. They're about structure, strategy, and the creative ways C-PACE was woven into deals to solve real problems. Here's what we saw, and where we're headed.

1. Blending Down the Cost of Capital

One of the most powerful applications of C-PACE in 2025 was its use as a cost-of-capital management tool, not as a replacement for any other piece of the stack, but as a complement to it. In an environment where debt fund pricing remained elevated, Sponsors increasingly brought C-PACE into deals alongside higher-cost senior lenders to make the blended rate work.

While the mechanics are relatively straightforward, the impact is significant. When a debt fund is pricing a senior loan at elevated market rates, C-PACE proceeds, typically carrying a fixed rate meaningfully below that threshold, can be layered in to reduce the weighted average cost of capital (WACC) across the full debt stack. This innovative structuring isn't gap financing in the traditional sense, and it benefits both sides of the table. The Sponsor gets a more manageable blended cost, and the senior lender often finds the deal more attractive because the overall debt service burden on the project is more sustainable.

We saw this play out in several transactions alongside debt funds in 2025, such as the $235 million in C-PACE financing NGC provided for the development of JEM Private Residences in Downtown Miami, and we expect this application to become one of the defining C-PACE use cases as long as conventional lending rates remain compressed against historical norms for bridge and construction capital.

With deal sizes for trophy assets now regularly clearing the $100 million threshold, C-PACE has cemented its role as a permanent fixture in the institutional capital stack for both ground-up developments and large-scale recapitalizations.

2. C-PACE as the Capital Stack Anchor

One of the more significant structural evolutions over the last few years has been the emergence of C-PACE not as a subordinate piece of a larger stack, but as the foundation of it. In select transactions, C-PACE was sized as the anchor position, the largest single source of capital in the deal, with a senior loan filling the remaining gap above it.

This inversion of the traditional model reflects how much lender confidence in C-PACE has grown. Senior lenders, now well-versed in C-PACE's statutory protections and consistent repayment history, are increasingly comfortable with it. Deals structured this way have allowed Sponsors to access highly competitive fixed-rate capital for the majority of their project cost while using a more flexible, albeit shorter-duration, senior loan to complete the stack.

Transactions of this type, such as The Geneva, the record-breaking office-to-residential development in Washington, D.C., demonstrate that C-PACE has graduated from a supplemental tool to a foundational one, and that the right project with the right Sponsor can be structured in ways that would have seemed unconventional just a few years ago.

3. Funding Cost Overruns

Construction cost volatility continued in 2025, and one of the most consistently relied upon applications of C-PACE during the year was its use to fund overruns on projects already mid-execution. When a project encounters unexpected costs, whether from material escalation, scope changes, or labor disruptions, the options for a Sponsor are typically less desirable: dilutive equity injection, expensive short-term bridge debt, or renegotiating with a lender who may not welcome the conversation.

C-PACE offers a different path because it is assessed against the property and tied to eligible improvements already underway or completed. As a result, it can be structured mid-construction to provide additional proceeds without disrupting the existing senior loan or requiring equity to come back in. This is a particularly powerful feature for projects where the underlying business plan remains sound, but the budget has shifted.

In 2025, Nuveen Green Capital partnered with Bank Hapoalim on a combined $100 million construction financing package for repeat Sponsor, Southern Land Company for Capella — a 22-story, 573,000 square-foot multifamily luxury high-rise located in Symphony Park in downtown Las Vegas. Formerly a Union Pacific rail yard, Symphony Park has evolved into a dynamic urban hub. $50 million in C-PACE capital was deployed mid-construction to fund key energy and water efficiency measures for the project. Through the strategic use of C-PACE, Southern Land was able to free up liquidity to fund their remaining project costs and reinvest in future developments, while ensuring the asset’s long-term success.

The key to this application is early identification. Sponsors who recognized cost pressure trends and moved to structure C-PACE mid-project were far better positioned. In 2026, we expect this use case to be more widely understood and proactively planned for.

4. Bridge to Stabilization

C-PACE's long-duration, fixed-rate structure makes it a natural fit for a challenge many Sponsors faced in 2025: bridging the gap between construction completion and full stabilization in an environment where permanent debt markets were selective and timing was uncertain.

Rather than forcing a refinance event at lease-up or scrambling for a short-term extension on a construction loan, Sponsors used C-PACE proceeds to extend their financial runway and reduce carrying costs during the lease-up period. Because C-PACE is non-recourse, fixed-rate, and long-dated, it doesn't create the same refinance pressure that traditional bridge financing does. It gives a Sponsor time to execute.

An example of this was Depot & Atlas, a creative office campus comprised of two Class A office buildings located in the burgeoning West Adams submarket of Los Angeles, an Opportunity Zone. NGC partnered with JLL to provide $32.4 million in C-PACE capital for a cash-neutral refinance to fully pay down the outstanding mortgage balance, requiring no additional Sponsor equity. By utilizing C-PACE’s flexible terms to recapitalize both assets post-construction, the Sponsor was able to pay down existing debt, which will result in significant savings that will position the property for long-term success while extending runway during the lease-up period.

This application is also relevant for mixed-use, hospitality, and multifamily projects where stabilization timelines are harder to predict, and where the difference between a forced sale and a patient, optimized exit can be measured in millions of dollars of value.

5. Reducing Recourse Exposure

Recourse carve-outs and personal guarantees remain one of the most significant pain points in commercial real estate lending, particularly for mid-market sponsors who lack the institutional balance sheet to absorb unlimited guaranty obligations. In 2025, C-PACE was used strategically to reduce the total recourse burden on a deal — not by eliminating the senior loan, but by reducing how much of the capital stack was subject to a personal guaranty.

Because C-PACE is a non-recourse financing tool assessed against the property rather than the Sponsor, every dollar of C-PACE in a capital stack is a dollar that does not require a personal guarantee. For a Sponsor financing a $30 million project with $8 million of C-PACE, the recourse obligation on the senior loan is materially smaller than it would be without C-PACE in the stack. In many cases, this made the difference between a deal getting done and a deal stalling on guaranty negotiations.

NGC transacted on Legends Bay Casino, located in Sparks, Nevada, just east of Reno and the first newly built casino in the area in over two decades. NGC provided $35.8 million in C-PACE financing to recapitalize the casino, providing a flexible, long-term solution to refinance its existing construction loan with more attractive terms and reduced recourse exposure.

We expect it to be a prominent conversation in 2026 as Sponsors become more deliberate about structuring their balance sheet alongside their projects.

Looking Ahead throughout 2026

The thread connecting all five of these applications is the same: the conversation around C-PACE has matured from eligibility to strategy. The market no longer needs to be educated on whether C-PACE can be used but on how it can be used. The opportunity now is to help Sponsors and their stakeholders understand precisely how to engineer it into a capital stack to reduce cost, manage risk, extend runway, and preserve optionality.

Several broader market dynamics are likely to shape how C-PACE is used in 2026. The rate environment, while showing signs of gradual easing, is not expected to return to the historic lows that defined the pre-2022 era. That sustained pressure on borrowing costs means the cost-blending application of C-PACE will remain as relevant as ever, and Sponsors who have not yet incorporated it into their standard underwriting toolkit will find themselves at a disadvantage relative to those who have. At the same time, the wave of loan maturities that has been building across the commercial real estate market is expected to crest more fully in 2026, creating a significant volume of recapitalization opportunities where C-PACE can serve as a creative and efficient restructuring tool.

On the lender side, we anticipate continued expansion of lender consent comfort, particularly among regional banks and debt funds that have now accumulated meaningful experience with C-PACE in their portfolios. As familiarity grows, the negotiation around C-PACE inclusion in a capital stack should become faster and more standardized, reducing one of the remaining friction points in deal execution. We also expect to see C-PACE enabled in additional states and municipalities, broadening the addressable market and bringing new Sponsors into contact with C-PACE for the first time.

The Sponsors who will capture the most value from C-PACE in 2026 are those who bring it into deal structuring conversations early, not as an afterthought or a rescue tool, but as a planned component of a thoughtfully constructed capital strategy. C-PACE has earned its seat at the table, and simply put, it has moved from a creative solution to market staple.