Done Right
Imperial Ridge is a proven, market-tested partner for C-PACE financing, having funded some of the largest deals nationwide, including the largest executed to date in Colorado.
The C-PACE market is crowded with promises, but the truth is there is no substitute for expert coordination of your capital stack and especially your debt sources to help ensure the certainty of close.
We make sure our clients have a full, realistic picture of the fundamentals of C-PACE. We provide expert insight on what it will take to secure lender consent, and we often lead the consent discussion with your lender.
What is C-PACE?
C-PACE, or Commercial Property Assessed Clean Energy financing, is a form of gap or incremental non-recourse financing that reduces the need for conventional debt, equity or capital reserves. This cost-effective financing tool can be used in the 26 states, plus Washington DC, that have active programs that allow C-PACE assessments to be placed on property tax rolls. C-PACE can be utilized for new construction, rehabilitation/retrofit, and renewable energy projects. For new construction, C-PACE can typically provide between 10% and 30% of the capital stack. For rehabilitation/retrofit and renewable energy projects C-PACE can provide up to 100% financing.
C-PACE FAQ
Q: Why should I consider C-PACE as part of my capital stack?
A: C-PACE offers a significantly lower-cost financing solution than mezzanine debt or preferred equity, which means a lower weighted-average cost of capital for development, saving you and your investors money, or allowing you to invest that money into other amenities in your development. C-PACE is non-recourse, reducing the Sponsor’s exposure; plus, it is automatically transferrable at sale, providing the opportunity for additional distributable funds.
Q: What kinds of projects can I finance with C-PACE?
A: C-PACE financing is flexible. It can be used to finance a wide variety of capital expenditures that improve an asset’s performance and add to its value. For example, you can use C-PACE for building system and envelope improvements, water and sewer system upgrades, onsite energy generation and hazard mitigation (seismic and wind storm). For retrofit projects on existing buildings, C-PACE can be used to finance 100% of the total project costs. The savings generated from the improvements often are greater than the annual financing costs, creating a cash flow positive project from day one, with no upfront capital expenditures by the owner.
Q: Can I use C-PACE for new construction projects?
A: A majority of our deals are new construction, so yes! Most C-PACE programs across the U.S. now allow for new construction C-PACE financing. Typical deals see 10% to 30% of the capital stack financed with C-PACE capital.
Q: How is the debt repaid?
A: C-PACE is repaid via a special, fixed property tax assessment over the term of the assessment (20-30 years). Because the repayment is a property tax assessment, owners, developers and asset managers have the unique ability to pass through all, or a portion of, the annual assessment costs to their tenants through their triple-net lease contracts.
Q: How is C-PACE treated by underwriters?
A: C-PACE is considered a form of debt, but it can still replace a portion of equity in the capital stack. In most cases, senior lenders consider C-PACE debt less threatening than mezzanine debt.
Q: How can Imperial Ridge help me access C-PACE financing?
A: Imperial Ridge is an approved C-PACE direct capital provider, not a broker. In addition, we pride ourselves on our white-glove service, doing all the heavy lifting, in coordination with program administrators, to get your project C-PACE-qualified. All you need to do is show us the opportunity.
Let’s start a conversation to discuss how we – a and our capital – can help you build better buildings and increase profitability.
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