C-PACE Lending Expanding in Size, Scope as Regulations Adjust

Nearly a decade since the commercial real estate industry’s first Commercial Property Assessed Clean Energy (C-PACE) loan securitization, the financing vehicle has experienced wide-scale growth both in the size and the scope of deals.

C-PACE financing, which is typically structured as fixed-rate, 30-year loans funded by a special assessment on the property tax bill, has grown well beyond its early roots of mainly fostering sustainability upgrades. It is now often used to spur new construction and serve as a credit enhancement in the capital stack for borrowers to recapitalize and refinance past debt in a higher interest rate environment.

The many borrower uses for C-PACE have fueled sharp growth, with 2024 producing a record-breaking year of $2.42 billion in originations across 214 deals, according to data from PACENation, a nonprofit advocacy group for the industry. While 2025 numbers are still being finalized, PACENation’s preliminary data shows that volume will far exceed the 2024 numbers given more than $10 billion of cumulative originations.

“In the early days of the industry, the first-use cases of C-PACE financing were rooftop solar and energy-efficiency retrofit projects,” said Alexandra Cooley, CEO and chief investment officer at Nuveen Green Capital (NGC). “Energy efficiency and resiliency went from being less than 50 percent of our financings in 2015 to over 95 percent today.”

NGC, then known as Greenworks Lending, executed the inaugural rated CRE C-PACE securitization in September 2017, with the $75 million transaction largely funding sustainability upgrades at office buildings in multiple states. The private lender was acquired in 2021 by Chicago-based asset manager Nuveen. 

Darien, Conn.-based NGC recently made more history with back-to-back record-setting financings, starting in September 2025 with a $290 million loan for Two Roads Development’s planned Pendry Hotel & Residences project in Downtown Tampa, Fla. The transaction, which was paired with a $230 million senior construction loan by Sculptor Capital Management, broke the previous C-PACE market marker set by Counterpointe Sustainable Real Estate’s (SRE) $255.9 million loan for an office-to-condomium conversion of the Aronson Building in San Francisco.

NGC shattered the C-PACE record again less than four months later in January 2026 with a $465 million C-PACE origination to facilitate Post Brothers’ 532-unit office-to-multifamily transformation at 1825-1875 Connecticut Avenue NW in Washington, D.C.  

Cooley said higher-for-longer interest rates along with ongoing maturity extensions have forced borrowers to reset capital stacks. Borrowers in turn are finding C-PACE to be a compelling option given that it can now provide up to 45 percent of the capital stack for some buildings. She said record-setting deals should continue, with 2026 already shaping up to be another banner year for NGC and the C-PACE industry in terms of loan volume. 

“Successive shocks such as the run-up in interest rates, cost inflation and generational shifts around use patterns have driven real estate owners to see incremental sources of capital, driving more demand and faster adoption,” Cooley said. 

Retroactive C-PACE loans have played a major role in spurring the growth of the financing tool, with more than 25 states now enabling commercial property owners to finance energy-
efficiency, sustainability or resiliency upgrades on completed projects over a three-year look-back period. 

Peachtree Group, another early adopter of C-PACE debt, closed the largest retroactive C-PACE financing with a $176.5 million loan in August 2025 to fund renovations to Dreamscape Companies’ 2,520-room Rio Hotel & Casino in Las Vegas, completed in 2024. The deal, which marked the biggest financing executed by Peachtree in the company’s 18-year history, enabled the borrower to pay down a senior loan for the project.

“Retroactive C-PACE has become a bigger part of the C-PACE story where people are utilizing it almost like rescue capital,” said Greg Friedman, managing principal and CEO of Peachtree Group. “This gives the ability to help recap and help stabilize the property from a capital structure perspective.” 

States such as Florida have expanded their C-PACE programs recently, removing look-back limits to enable landlords to retroactively finance certain upgrades as far back as a project’s inception. Florida’s expanded C-PACE program that took flight in 2024 also increased the types of construction uses owners could utilize from the debt vehicle for resiliency measures like flood mitigation, wind resistance, storm hardening and septic-to-sewer conversions.

Friedman said increased acceptance by banks to partner with C-PACE lenders on construction deals has also sparked growth for the industry since interest rates began to spike in 2022.

“Historically speaking, the biggest challenge when you originate a C-PACE loan is getting the senior lender to consent to it and, as we’ve been in this higher-for-longer interest rate environment, it’s caused banks to look at creative ways to work with borrowers to help them recapitalize,” Friedman said. “It helps reduce their exposure so that they’re not taking on as much risk at the bank level by consenting to the C-PACE loan, which is secured by a property tax assessment and not secured by a first lien on the real estate.”

Peachtree (formerly called Stonehill) started its C-PACE business in 2019 and has emerged as one of the leading lenders in the space, with nearly $2 billion of originations from more than 150 deals. This February, it closed the largest C-PACE loan in Georgia with a $52.4 million refinance for Great Point Studio Management’s newly built film studio project in Douglasville, Ga. 

Atlanta-based Peachtree’s unofficial ranking in the C-PACE market went up this year, too, when Petros PACE Finance halted its roughly $2 billion loan portfolio in early April and shed most of its staff. Apollo Global Management, which acquired Petros in early 2022, is re-evaluating how to proceed with the C-PACE platform under its own umbrella, according to sources. 

Austin-based Petros made its mark in C-PACE before pumping the brakes on the platform, closing a then-record $153 million C-PACE loan in October 2022 for Utah’s Black Desert luxury resort for sustainability and resiliency measures. It also originated New York City’s first C-PACE loan with an $89 million financing in June 2021 for the acquisition and redevelopment of 111 Wall Street, also a record transaction for the industry at the time.

Sources said that Petros’ pullback from the C-PACE market is not a reflection of momentum in the lending space and was more the result of tightening credit conditions prompting Apollo to rethink how to utilize the platform. Apollo paused Petros’ C-PACE activities following a disappointing past year in which it originated less than $400 million in volume, according to sources.

Petros PACE Finance did not immediately return a request for comment. 

The surprising pause of Petros PACE came at a time when there are plenty of green shoots for C-PACE aided largely by an expanded New York City program. Due to regulatory holdups, C-PACE activity in New York City had paused after the first two deals there piloted by Petros and NGC in 2021. Then, officials expanded eligible projects to include gut rehabilitations in addition to renovations. 

Manhattan law firm Adler & Stachenfeld was on the ground floor covering C-PACE deals in New York City when the financing vehicle was first enabled in 2019 by Local Law 96. The firm formalized a C-PACE practice in 2019 after closing C-PACE deals over the previous year in other areas of the country, including Philadelphia and Chicago. 

Even after New York City’s slow C-PACE beginning, A&S remained bullish that the vehicle would eventually take off. Last year the firm advised Counterpointe SRE in the closing of a $156 million loan for Echelon Studios, an all-electric film and TV production development in Brooklyn. The loan for developers Bungalow Projects and Bain Capital Real Estate marked the largest C-PACE loan in New York state history and the city’s first C-PACE financing utilizing new construction under the updated regulations. 

“The C-PACE program took awhile to get its sea legs in New York City, but now it is definitely open for business,” said YuhTyng Patka, chair of Adler & Stachenfeld’s PACE finance practice. “These laws implementing C-PACE, like in New York City, are evolving to become more flexible to allow more projects to be eligible to squeeze more C-PACE dollars out of projects.”

The firm’s C-PACE practice, led by Patka along with partners Ilya Leyvi and Ryan McCaffrey, is active on a national scale well beyond New York, representing Post Brothers in the historic $465 million Washington, D.C., loan early this year. It also represented CounterpointeSRE in July 2023 in a $256 million loan for the conversion of a Four Seasons Residences in Las Vegas that at the time was the nation’s largest C-PACE financing.  

Patka said the Big Apple is poised for more C-PACE usage going forward after New York City this spring became one of the first jurisdictions to include embodied carbon as part of the calculation for how much C-PACE financing adaptive reuse projects are eligible for. She noted that C-PACE can now also be used for acquisition costs for adaptive reuse, which could be particularly beneficial for office-to-residential conversions. 

A&S also represented JEMB Realty in an $8.5 million loan from North Bridge for capital upgrades to Herald Towers in Midtown Manhattan, marking the first New York City C-PACE multifamily loan. 

Laura Rapaport, founder and CEO at lender North Bridge, said the Herald Towers deal, which funded replacements of aging heating and cooling systems with more efficient electrified equipment, is an example of how C-PACE can be used as a credit strategy to produce long-term value for a variety of properties. 

North Bridge also originated in April a groundbreaking $13.8 million C-PACE financing paired with a $25 million senior loan from Old National Bank for the ground-up development of the Pike multifamily project in Nashville. It was structured as the first delayed-draw deal in Tennessee history. The transaction, which was the second-ever delayed-draw C-PACE financing nationally, creates increased flexibility during the construction process by allowing borrowers to draw funds when needed without having to pay interest on the full amount. 

“These deals represent structural changes that will continue to enhance the viability of the product and the interest in people utilizing the product,” said Rapaport, who founded North Bridge in 2021. “C-PACE gives borrowers another tool to get the proceeds that they need while reducing the dependence on much more expensive forms of capital.”

CounterpointeSRE, which is backed by MassMutual, has proven to be a major force in C-PACE lending over the last decade, both with large loans and smaller breakthrough deals. 

The Stamford, Conn.-based lender, one of the initial C-PACE capital providers during the 2010s, closed the first New York City C-PACE deal for a multifamily cooperative at 304 West 89th Street on Manhattan’s Upper West Side in April. While the $1 million deal to fund a heat pump installation in the landmarked 36-unit building is small in size, the financing underscores C-PACE’s potential in New York City, according to Eric Alini, CEO and founder of CounterpointeSRE.

Alini, a former commercial mortgage-backed securities (CMBS) lender at Merrill Lynch who launched Counterpointe in 2013, said an increasing embrace of C-PACE by senior lenders has also paved the way for more deals. He noted that its Echelon Studios transaction also involved a $148 million senior construction loan from Farallon Capital Management, and the firm has partnered with Barings on a number of financings. 

“The market has grown because people like ourselves or Nuveen or some others have gotten the acceptance by the lending community that this can work and it can be accretive to them, not just accretive to the borrower,” Alini said. “There has been a lot of innovation in C-PACE, but soon we’ll start to see standardization, and that’s where the market will really begin to accelerate.” 

Fourteen years after Connecticut greenlighted the first statewide C-PACE program, 40 states and Washington, D.C., have enabled legislation for the financing tool. New Jersey, North Carolina, Idaho and Hawaii added active C-PACE programs last year, bringing the active program total up to 32, compared to just six in 2015, according to PACENation.

Even with the upward trajectory of C-PACE, there is still potential for growth, according to Jared Schlosser, head of credit origination at Peachtree Group, who lobbied for the state of Georgia to establish statewide C-PACE legislation in 2024. 

“As those new states’ legislatures get more seasoned, and the municipalities, counties and cities within those states start adopting C-PACE programs, you’re going to see a huge rise in volume,” said Schlosser. “When you look at it from a new program standpoint, you’re talking about being in the first inning of a very long game.” 

Andrew Coen can be reached at acoen@commercialobserver.com.