Inside the Growth of C-PACE Financing for CRE

C-PACE or commercial property assessed clean energy financing is increasing in popularity among Southern California owners. Adding a C-PACE component to the capital stack can help to curb the costs of energy upgrades and adaptive reuse projects, according to Jon Spelke of CleanFund. The company has financed several properties, including The Garland creative office development in Downtown Los Angeles.

“Commercial PACE financing continues to gain steam in Southern California as more owners and developers are utilizing it as a component to lower their overall blended cost of capital on energy and seismic upgrades, adaptive re-use projects and new construction,” Spelke, managing director at CleanFund, tells GlobeSt.com. “With rates in the low 6% range, as compared to mezzanine and private lenders offering 8% to 14%, C-PACE has become a valuable option in bridge, construction and permanent financing scenarios.”

Although it is rising in popularity, C-PACE isn’t a new program. It was first introduced in California in 2008. “C-PACE was introduced in California as a form of voluntary parcel tax assessment financing to fund qualifying improvements that reduce energy and water usage, and other resiliency benefits including seismic enhancement and retrofits,” says Spelke. “Furthermore, with California’s strict energy code including Title 24 and Green Build requirements, simply “building to code” generates sufficient qualified and eligible improvements under the C-PACE financing program.”