The Commercial Property Assessed Clean Energy market (C-PACE) is an alternative financing source for new construction, renovation, and standalone energy projects within commercial real estate.
Property owners can fund a variety of environmental projects via C-PACE financing, including investment in renewable energy architecture and energy/water efficiency.
C-PACE financings are generally super-priority liens akin to real estate taxes, senior to most other debt on the property, and typically repaid in the form of an assessment on the building owner's property tax bill over a period of 10-30 years.
The growth in total C-PACE investment portends growth for the sector, although it is not without challenges and growing pains e.g., construction risk, renovation appraisal difficulty, limited performance history.
The securitization market for C-PACE is nascent, with the first deal priced in late 2021. At least three deals were done in 2023, bringing total issued (securitized) debt to just under $800 million.
