C-PACE for Retrofits
C-PACE enables commercial property owners and developers to obtain low-cost, long-term financing for energy efficiency, water efficiency, renewable energy, and resiliency retrofits.
How it works
Like many public finance mechanisms, C-PACE financing is repaid via a special assessment on the property’s tax bill. C-PACE assessments, however, are 100% privately funded – no public or taxpayer money is involved.
Petros obtains written consent from all lenders with a secured interest in the property. Mortgage lenders’ acknowledgment and consent will include a description of the C-PACE financing and a certification from the mortgage lender that the financing does not create an event of default under the terms of the mortgage.
C-PACE financing means
- No upfront costs
- Financing is non-recourse, non-accelerating
- Transferable payment obligation
- Increases property value
- Reduces operating expenses
- Immediately cash flow positive
- Solves split incentive lease structures
How it works
Like many public finance mechanisms, C-PACE financing is repaid via a special tax assessment on the property’s tax bill. C-PACE assessments, however, are 100% privately funded – no public or taxpayer money is involved.
Petros obtains written consent from all lenders with a secured interest in the property due to indebtedness. Mortgage lenders’ acknowledgment and consent will include a description of the C-PACE financing and a certification from the mortgage lender that the financing does not create an event of default under the terms of the mortgage.
C-PACE financing means
- No upfront costs
- Financing is non-recourse, non-accelerating
- Transferable payment obligation
- Immediately cash flow positive
- Solves split incentive lease structures
- Increases property value
- Reduces operating expenses
How it works
Like many public finance mechanisms, C-PACE financing is repaid via a special tax assessment on the property’s tax bill. C-PACE assessments, however, are 100% privately funded – no public or taxpayer money is involved.
Petros obtains written consent from all lenders with a secured interest in the property due to indebtedness. Mortgage lenders’ acknowledgment and consent will include a description of the C-PACE financing and a certification from the mortgage lender that the financing does not create an event of default under the terms of the mortgage.
C-PACE financing means
- No upfront costs
- Financing is non-recourse, non-accelerating
- Transferable payment obligation
- Immediately cash flow positive
- Solves split incentive lease structures
- Increases property value
- Reduces operating expenses
C-PACE vs Alternatives
C-PACE builds value by enabling implementation of sustainable upgrades, while also positively impacting a property’s bottom line. Funding a retrofit project with C-PACE financing can lower the total cost of capital and generate a faster time to positive cash flow compared to utilizing a conventional loan or by self-funding. In turn, the energy savings boosts net operating income (NOI) and increases the value of the property for building owners.
financing scenarios comparison summaries
Debt Financing
Out-of-Pocket Equity Investment
Energy Savings (First Year)
Annual Debt Service Payment
Capitalization Rate
Value to Property Owners (FCF/Cap Rate, if positive)
Years to Positive Project Cash Flow
Cost of Capital (Assume Equity Costs @20%)
Self-Funded
$0
$5,000,000
$537,415
$0
($4,462,585)
7.00%
$0
9.1 Years
20.00%
Conventional Loan
$4,000,000
$1,000,000
$537,415
$898,508
($1,361,093)
7.00%
$0
10 Years
7.20%
PACE Financing
$5,000,000
$0
$537,415
$446,241
$91,174
7.00%
$1,302,483
Immediately
7.20%*
*subject to market rate
Cumulative cash flow effect on financing type
Additional Benefits of C-PACE for Retrofits
- Frees up operating and capital budgets
- Cash flow positive from day one, potentially
- Interest rate and payments are fixed over 10-30-year terms and under no circumstances, even default or bankruptcy, can they accelerate
- PACE liens attach to the property and “run with the land,” automatically transferring from one owner to the next so the building owner only “pays for what they use”
- Underwriting based primarily on the property, no personal guarantees
- Owner keeps any tax credits and/or rebates as a result of the project
Additional Benefits of C-PACE for Retrofits
- Frees up operating and capital budgets
- Cash flow positive from day one
- Interest rate and payments are fixed over 10-30-year terms and under no circumstances, even default or bankruptcy, can they accelerate
- PACE liens attached to the property and “run with the land,” automatically transferring from one owner to the next so the building owner only “pays for what they use”
- Underwriting based primarily on the property, no personal guarantees
- Owner keeps any tax credits and/or rebates as a result of the project
Additional Benefits of C-PACE for Retrofits
- Frees up operating and capital budgets
- Cash flow positive from day one
- Interest rate and payments are fixed over 10-30-year terms and under no circumstances, even default or bankruptcy, can they accelerate
- PACE liens attached to the property and “run with the land,” automatically transferring from one owner to the next so the building owner only “pays for what they use”
- Underwriting based primarily on the property, no personal guarantees
- Owner keeps any tax credits and/or rebates as a result of the project
