C-PACE financing is gaining popularity in the current market due to challenges in traditional capital markets. In a recent interview, Matthew McCormack, Senior Vice President of PACE Loan Group, shared his insights on C-PACE trends and its increasing importance as part of the capital stack.
Q: How is C-PACE (Commercial Property Assessed Clean Energy) financing becoming an increasingly important part of the capital stack?
A: The maturity and liquidity of PACE Loan Group and other industry players have made C-PACE a viable option for enhancing leverage. With higher interest rates causing traditional lenders to pull back, we are filling gaps in the capital stack with our competitive senior debt offerings.
Q: What are some benefits and creative uses you’ve seen for C-Pace financing?
A: We have structured various deals using C-PACE financing that offer attractive terms compared to banks. This has been particularly beneficial for clients seeking non-bank lenders or facing construction delays or unstable projects.
Q: Can multifamily housing benefit from gap financing through CPace?
A: Yes, with long maturities and stress in this market segment we see opportunities where our 30-year term loans can finance up to 25% -35% depending on state regulations.
“C-pace offers certainty of execution & flexibility.”
Q; What types if developments do you typically see utilizing CPace such as affordable housing or student living properties?
We often work with workforce housing projects along with hotel-to-multifamily conversions. Senior communities also commonly use our funding options for property improvements such as HVAC upgrades which are eligible under CPace guidelines.
In addition to these common scenarios, securitized CPace loans have become an attractive fixed-income asset class for investors due to increased liquidity in the market driven by larger players showing interest through investments or purchasing notes. As more growth potential remains within this space it’s no surprise that 2023 was Paces Loan Group’s best year yet and they are on track to exceed that in 2024.
Don’t miss Matthew McCormack, a panelist at the upcoming Connect Midwest: Multifamily, Affordable, Senior & Student conference on Tuesday June 4th. Register today for an opportunity to network with commercial real estate colleagues and industry leaders!
