Commercial Property Assessed Clean Energy (C-PACE) financing has rapidly transitioned from niche tool to mainstream capital solution, with record issuance volumes and deal sizes now reaching into the hundreds of millions. Once viewed as complex and difficult to implement, C-PACE is increasingly embraced by major developers, institutional borrowers, and even traditional banks that now see it as a reliable complement to construction loans. With adoption concentrated in states like California, Texas, and Ohio, and innovative deal structures emerging to reduce costs, C-PACE is reshaping how commercial real estate projects — from hotels to multifamily and senior housing — are financed. 

Anne Hill, SVP at Bayview PACE, a division of Silver Hill Funding, a wholly owned subsidiary of Bayview Asset Management, LLC, says the shift reflects tighter bank lending capacity, sharper C-PACE pricing that’s often in line with construction loans, and growing acceptance among lenders and mortgage brokers. 

CM: C-PACE financing had a record year recently. What do you see driving that surge, and do you think the momentum is sustainable? 

AH: Pricing of CPACE has come in significantly over the past few years.  In many cases it is in line with Bank Construction loan pricing. Banks have had limited construction lending capacity, and borrowers have had to rely more on debt funds, and products like PACE for their construction projects. C-PACE has become much more accepted within the banking community and also the mortgage brokerage community. 

CM: Are you seeing larger, more recognizable names in commercial real estate embrace C-PACE? What’s motivating them? 

AH: Yes. Much more of a mainstream product now than even a few years ago.  Again, driven by lower cost of CPACE, limitations with Bank Construction loan capacity, and more awareness of PACE in the CRE industry. Additionally, CPACE loans are getting larger – many transactions over $100 million of CPACE, which makes it a relevant tool for larger developers. 

CM: Hotels and multifamily—along with senior housing—seem to be the most popular sectors for C-PACE right now. Why are these asset classes leading the adoption? 

AH: Historically, hotel developers have looked to debt funds and alternative sources of financing to try and get higher leverage transactions. Hotels were one of the early adopters of CPACE. There has been a lot of multifamily development happening in the past few years and the demand for capital has exceeded the availability of bank capital.   

CM: Beyond those, which CRE sectors do you think are poised to expand their use of C-PACE financing? 

AH: We are seeing a lot of office and retail. Many lenders are closed off to these property types right now, but there are certainly developments in those sectors that make a lot of sense. Our office and retail pipeline is stronger than it has ever been. 

CM: Bayview PACE recently executed record-setting deals including $137 million in C-PACE for a Westin resort by Driftwood and $180 million for North Development’s 35-story multi-family in Miami, with the C-PACE funded in tranches to minimize interest carry costs on both deals. Can you walk us through that innovation and why it mattered? 

AH: As the size of PACE loans has increased, so has the duration of the construction schedule.  Rather than funding all of the PACE upfront at closing, Bayview works to minimize the total cost of capital for the borrowers, buy funding the loan across multiple tranches or phases. This makes the draw/fund distribution more closely mirror a traditional construction loan draw and significantly reduces any costs on undrawn funds. 

CM: Are you seeing other creative structures emerge to make C-PACE more flexible or cost-effective for borrowers? 

AH: The use of CPACE for condominium development is something Bayview has been doing for many years. As long as the PACE is paid off at the time the unit is sold to an individual buyer of the unit, it will still fall under Commercial PACE program guidelines. 

We are also seeing higher leverage CPACE transactions. In many states, the legislation now includes “resiliency” as an eligible measure, which allows us to include additional items in our financing such as foundations and structural elements of the project. 

CM: Are you finding that banks are now more willing partners—some even offering C-PACE themselves or setting up partnerships with providers? 

AH: Yes. Banks have a better understanding of PACE and more comfort with it in the structure. We often have banks calling us to partner on large transactions that exceed their max loan amount. Many times, the bank would rather partner with a PACE lender to syndicate a loan because it allows the bank to hold all of the deposits, and it doesn’t involve a complex intercreditor agreement. On very large deals, a bank can partner with one CPACE lender instead of syndication to a handful of smaller bank partners.