There are several advantages provided by the C-PACE that are superior options to more traditional real estate financing instruments.
- Long term, fixed rate financing provides predictability of borrowing by a reduction of carrying costs, in addition to a hedge against future increases in market rates.
- Flexible prepayment options are available allowing property owners more freedom in their buy-hold decisions, as well as, easing the refinance burden.
- C-PACE financing is property-based and non-recourse to the property owner with no financial covenants. Since it is property based, there is due on sale and the C-PACE is freely transferable to real estate buyers.
- C-PACE is processed as a real estate tax and as such is treated as a property expense, as opposed to contingent liability against the owner’s balance sheet.
- Financing costs may be offset by recovery through tenant tax reimbursements on retail, office or industrial assets or green room taxes/fees on hospitality assets.
- Many jurisdictions have “lookback” features of one to three years. This provides the ability to access liquidity for energy efficient improvements that have already been completed without refinancing the entire capital stack.
- C-PACE financing is a low-cost alternative to expensive construction first mortgage debt or mezzanine debt.
- C-PACE assessments by definition have quantifiable savings and the result is increased building value, lower operating expenses and a better building for tenants which makes it a stronger asset for both building owners and mortgage lenders.