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C-PACE Financing Is On The Rise. How Can Owners And Developers Make The Most Of It?


Liquidity has been hard to come by as lenders pulled back during the coronavirus pandemic — while some commercial real estate owners looked for bridge financing, others turned to another capital source that could not only help get their new projects or renovations off the ground, but could also reduce their operating costs.

Commercial property assessed clean energy — or C-PACE — financing gives property owners access to long-term, fixed-rate financing to make energy improvements to existing buildings or new developments. This type of financing has been gaining popularity across the U.S. as state governments look for ways to encourage developers to make their properties more energy-efficient and owners search for affordable ways to upgrade their buildings. 

“C-PACE financing regulations have been passed in about three dozen states across the country and new programs have been springing up regularly,” Greenworks Lending CEO and co-founder Jessica Bailey said. “There was also a pullback on different kinds of financing due to the pandemic, leading to a liquidity crisis for developers, and C-PACE has been able to step in and fill that void.” 

At Greenworks Lending, Bailey and her team work to help developers and property owners make the most out of all C-PACE financing has to offer, from negotiating with mortgage lenders to underwriting a property to identifying qualified improvements that can be financed through the program. Bisnow sat down with Bailey to learn more about the rise of C-PACE, and what developers and owners should know before diving in. 

Bisnow: What are the key benefits of C-PACE that owners and developers should know? 

Bailey: There are many, but to start with, I would point out that C-PACE financing allows building owners to access fixed-rate, long-term financing without requiring corporate or personal guarantees. It’s secured by the property and payable on the property tax bill, which has both accounting and tenant benefits.

It also allows building owners to access the full project cost, including any of the audit or ancillary work that needs to be done to install new equipment. It’s very flexible financing that minimizes, or eliminates, any out-of-pocket costs for developers and owners doing energy- or water-related building performance-enhancing projects. 

Bisnow: What are some common misconceptions about the program? 

Bailey: Some people think C-PACE is only for owners who are trying to go carbon-neutral or very aggressively reduce the environmental impact of their buildings. While that’s certainly something an owner can do, C-PACE financing is also available to owners who are doing deferred maintenance projects. If an owner for an older property is simply trying to replace a chiller or a boiler or windows or even lights, the new equipment will likely be more energy efficient than what they are taking out and they can obtain C-PACE financing for those improvements. 

Another misconception is that senior lenders will not allow C-PACE financing to come into projects. On the contrary, we have secured the consent of hundreds of banks and lending institutions for C-PACE. 

Bisnow: How does C-PACE work? What measures can be financed? 

Bailey: Greenworks thinks about using C-PACE in four different applications. The first is for owners who have deferred maintenance or capital expenditures on their properties — old boilers or windows or HVAC that need to be replaced, projects like that. The second is for building owners who are looking to do a solar and roof project — C-PACE can allow these owners to finance 100% of the solar and roof, while also allowing them to take advantage of the tax credits to offset repaying the loan.

The third type is new development, for developers who plan to integrate sustainable energy measures into their buildings. For them, C-PACE can offset other financing, like mezzanine financing, coming into the capital stack and [allowing borrowers to] access capital that will help them install energy-efficient features. The final type is recapitalization, for building owners who have used cash or equity to make upgrades and want to use C-PACE to retroactively pay themselves back to free up liquidity. 

Bisnow: How does C-PACE differ from other forms of CRE financing? 

Bailey: C-PACE financing is half the cost of mezzanine financing in a new development, dropping a developer’s WACC [weighted average cost of capital] meaningfully. In a renovation project, owners can access 100% of the project cost upfront, making an owner cash positive from day one. It’s a way for owners to avoid out-of-pocket costs. It also doesn’t require any ongoing covenants. It’s nonrecourse, and the collateral C-PACE lenders have isn’t against the owner, it’s against the property.

Bisnow: What are the first steps owners and developers should take if they are interested in obtaining C-PACE financing?

Bailey: The first thing owners need to do is make sure their property is in an eligible location. The Greenworks team can quickly pop in an owner’s address and it will determine whether they are eligible, the types of financing they can get, and what the restrictions or requirements are in their area.

Next, the owner will submit some basic financial information about the building and we will underwrite it to make sure a building’s financial situation can handle this process. We will speak to their mortgage lender and explain what the owner is looking to do and request their consent, and conduct an engineering review. Then, we will close financing. 

Bisnow: How can C-PACE lending help building owners with maintenance projects and upgrades?

Bailey: We recently provided a $10M C-PACE loan for a multifamily property in Colorado. This enabled the building to undergo a massive renovation that included solar panels, new windows, a new roof, updated plumbing  — really everything the building needed. We were able to offer very attractive financing that dropped the cost of capital for the project. 

We also did a project in New York for an assisted living facility. Through the C-PACE financing we provided them, they were able to install solar panels, reduce their energy bills and take advantage of all the tax credits that came with those improvements.

To learn more about C-PACE financing, visit

This article was produced in collaboration between Greenworks Lending and Studio B. Bisnow news staff was not involved in the production of this content.

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