A significant increase in the use of Commercial Property Assessed Clean Energy (C-PACE) loans is transforming the commercial real estate investment landscape, providing property owners with innovative financing solutions for energy-efficient upgrades and resilience improvements. This month, Nuveen finalized a historic $465 million C-PACE deal for The Geneva, marking the largest financing of its kind to date. C-PACE loans, secured by tax assessments at the state level, are repaid over extended periods, making expensive upgrades more manageable for property owners.
Since its inception, cumulative C-PACE investment has approached $10 billion, with accelerated growth particularly noted in the last five years. As of now, 40 states have adopted C-PACE policies, significantly up from just six active programs in 2015. This increase in adoption has led institutional clients to favor C-PACE for its fixed-rate, long-term financing, especially as traditional bank lending faces challenges.
Nuveen’s C-PACE loans have contributed to significant carbon reduction, with upgrades helping to eliminate over 300,000 metric tons of carbon dioxide emissions. However, experts like Alexandra Cooley, CEO of Nuveen Green Capital, emphasize that the driving force behind these loans is the need for property efficiency and resilience rather than exclusively environmental goals.
The versatility of C-PACE financing allows for retrospective funding of renovations, providing liquidity to property owners who may be struggling with traditional loan obligations. Peachtree Group’s recent $176.5 million C-PACE deal for the Rio Hotel & Casino illustrates this application, positioning C-PACE as a vital tool in a challenging commercial lending environment.
Why this story matters:
- C-PACE financing offers crucial support for property owners in a tight lending market, making energy and resilience upgrades feasible.
Key takeaway:
- Institutional investors are increasingly drawn to C-PACE loans as they provide long-term, fixed-rate financing options that enhance property value.
Opposing viewpoint:
- Some argue that the focus on resilience over environmental benefits may shift the original intent of C-PACE financing, potentially detracting from broader sustainability goals.
