The cat is out of the bag for Commercial Property Assessed Clean Energy financing, or C-PACE.
C-PACE financing executions across the country totaled a little more than $2 billion in both 2023 and 2024, according to PACENation, which tracks and advocates for C-PACE financing. The nonprofit association hasn’t published the final numbers for 2025 yet, but CNBC reports that Nuveen Green Capital closed more than $2 billion in C-PACE loans across 53 deals last year alone.
“In less than a decade, C-PACE has grown from a niche, nuanced product to institutionally recognized,” says Rafi Golberstein, founder and CEO of PACE Loan Group (PLG), a C-PACE lender based in Minneapolis with regional offices in New York City, San Diego and Chicago. “That’s both a result of the growth of the industry to this point and what’s fueling its next phase. As the clientele has moved from mostly regional developers to include the large, national developers, the deal size has increased as well.”
Earlier this year, PLG secured a $100 million C-PACE loan for Patmos, an artificial intelligence (AI) data center operator. The company is converting a glass-encased building in downtown Kansas City that once housed the operations of The Kansas City Star newspaper into a hyperscale data center facility.
“Patmos engaged us because they were looking at ways to minimize their environmental footprint,” says Golberstein. “This isn’t a massive, windowless facility that’s drawing astounding amounts of power and water without clear benefit to the neighbors. The campus has a coworking space and they’re adding an event space. It’s a very cool way to bring an old building back to life being undertaken thoughtfully; it’s a great example of using a building sitting idle to meet a new type of demand.”
Originated in Berkeley, Calif., in 2008, C-PACE financing is available in 40 states and Washington, D.C. In practice, developers borrow a loan from a C-PACE provider or partner lender, and that amount is added to the property’s tax bill and recompensed over a longer period. Borrowers are seeking this type of financing as it has inherent flexibility and a “lookback” period of up to three years, giving borrowers the ability to retroactively finance their developments and redevelopments.
Golberstein says that the best aspect of C-PACE financing is its versatility. He says that conversations with borrowers often start with addressing their pain points, because C-PACE can be the solution for so many issues.
“What attracts borrowers varies on a case-by-case basis,” says Golberstein. “Cost of capital is a common one, in which case they’re excited about our ability to come in and blend down their coupon. For others, they need zero recourse; they’re really driven to limit the bank’s recourse, which is a terrific opportunity to bring in C-PACE. Another borrower may have gotten burned in the last cycle when rates want from zero to 6 percent and they couldn’t refinance out, in which case they’re hyper-focused on C-PACE’s long-term aspect.”
REBusinessOnline.com recently caught up with Golberstein to discuss trends with C-PACE, the future of the platform in the Southeast and the role of PLG in C-PACE’s coming out party. The following is an edited interview:
REBusiness Online: Are elevated construction costs helping drive demand for C-PACE executions?
Rafi Golberstein: I believe so. As material and energy costs continue to rise, gaps between expected costs and expected value appear. In the past, this was where projects stalled or expensive mezzanine debt entered the capital stack. Another reason that construction debt is harder to come by is that banks generally require large depository relationships and a full personal guaranty, and that does not work for a lot of developers.
C-PACE is increasingly being recognized as a better way, not just to keep projects moving, but also to give some flexibility and, frankly, breathing room to the people trying to get something done. When [PLG] comes into a deal with a bank, for example, we dollar-for-dollar reduce the developer’s recourse exposure. Construction costs are a driver, certainly, but they’re far from the only one.
REBO: Debt funds are also active partner lenders with C-PACE providers like PLG. For those lenders, what is the biggest draw to include C-PACE financing in the capital stack?
Golberstein: There are two elements that make us a great partner for debt funds. The first is pretty bottom line: Bringing in PLG is a great way for debt funds to limit their dollars-out-the-door exposure while still hitting their yield mandate. Whether their portfolio is starting to feel overweight in an entire asset class or a single deal holds too much sway, C-PACE can help them right-size, especially if they have multiple deals that are still within the lookback period.
The second is less rigidly quantitative but no less important: We allow them to hit their box without introducing risk. Our debt partners like our institutional backing, it’s a signal that we’re reliable, stable and we’re capable of taking a more comprehensive view of a deal than a lot of lenders are.
REBO: Why do you think some borrowers of seniors housing properties are attracted to C-PACE versus traditional financing sources?
Golberstein: Senior living facilities are highly complex to build and intensive to operate, so efficiency gains aren’t just environmentally beneficial to them, they’re material to their business. The kind of improvements they need — maybe even are legally required to have — are the kind C-PACE was designed to promote from day one: High-efficiency HVAC systems, flood preparation and mitigation, advanced building envelopes, etc.
It’s a natural fit for us, but they’re different enough from a normal real estate transaction that they can find themselves outside a traditional lender’s box. Their facilities are operating businesses rather than just real estate. They need a specialized manager and staff, which means traditional lenders apply a significantly tighter box and increased scrutiny to those deals. That’s a great opportunity for us, because we get to take on some of the deals they pass on simply because they’re outside the norm.
REBO: Many markets are dealing with flat or even negative rent growth for multiple property types. Does rent growth/NOI heavily impact underwriting for C-PACE lenders like PLG?
Golberstein: Rent growth and NOI absolutely matter in C-PACE underwriting, but not in isolation. C-PACE is a long-term financing product, so while we consider near-term cash flow, debt-service coverage, debt yield and overall leverage, we are also underwriting the durability of the asset and the business plan over a much longer horizon than a bank, for example.
REBO: What are some recent C-PACE transactions that PLG has executed that are noteworthy?
Golberstein: We closed the first C-PACE deal in Raleigh alongside a local bank: it’s a fully automated parking garage where people drop their cars off and the facility will park them underground. It’s being built with EVs in mind, so there’s fast charging in every bay. It’s esoteric to say the least, but very cool, and a great fit for us.
Another example is the Hyatt House in Orlando. It’s a ground-up build right across from the Orange County Convention Center, but what makes it interesting is that there wasn’t a traditional mortgage lender in the capital stack. The sponsor is very experienced, and the location is terrific as well; they could have gone the normal route and gotten financed that way. Instead, they were willing to think creatively and got a great deal out of it. There will always be borrowers that are best served by the traditional finance mechanisms, but I’m excited to see an increasing number of deals like this one where there’s latitude to find the best possible deal by thinking a little differently about the process.
REBO: Four states in the Southeast — Louisiana, Mississippi, South Carolina and West Virginia — don’t have C-PACE programs in place. Why do you think some states haven’t embraced C-PACE yet?
Golberstein: The list of states that don’t have a C-PACE program shrinks every year, so with just 10 states left without one, the reasons are increasingly specific to the individual state’s situation. Some states still want to see the kind of returns their peer states are getting with their programs, others are facing logistical constraints that restrict program creation in the short-term.
But C-PACE’s track record of success speaks for itself. The State of Alabama added C-PACE this year, Georgia just improved its program, Colorado and New York are expanding theirs and no state is looking to wind their programs down.
The map is filling in, largely being driven by demand for deals in an area, which is closely tied to population
centers — that’s why 47 of the 50 largest cities in the United States are already covered by C-PACE. No matter which states adopt it next and which ones wait until the last moment, it’s reasonable to expect C-PACE to be in place nationwide before long.
REBO: As a follow-up, does that mean borrowers can’t execute C-PACE financing for properties in those states?
Golberstein: Unfortunately, yes. For the time being, that is, new programs are added fairly regularly. I mentioned Alabama adding a new program this year, Vermont and the U.S. Virgin Islands passed legislation to create theirs as well.
REBO: Generally speaking, are borrowers today more familiar with C-PACE?
Golberstein: Absolutely, persistence works in our favor here: Every year, there are more states with programs, more deals that get done and more lenders that encounter C-PACE even if they don’t actively seek it out. The market conditions are such that a flexible financing option like C-PACE is highly attractive, even to lenders that may have been less willing to engage the idea in the past. Since 2018, C-PACE has a compounding growth rate of 40 percent, and I believe there’s still room for that to continue.
— Q&A was originally published in the July 2026 issue of Southeast Real Estate Business