Capital Stack Analysis

Pairing National C-PACE Expertise with Comprehensive Capital Stack Analysis

Commercial real estate projects receive capital from multiple sources and from investors who have varying expectations and risk and return goals. As an owner or investor, it’s critical to complete a thorough due diligence process with a focus on how an investment’s place in the capital stack impacts performance. Regardless of the asset class, evaluating, measuring, and understanding a funding solution’s risk and return metrics is the first step in developing a successful investment strategy.

Ebee pairs its national C-PACE expertise with comprehensive capital stack analysis, considering the different types of capital invested into your commercial real estate project and the relationship between each type.

We help you:

  • Understand how much risk, upside potential, and downside protection your commercial real estate project may have
  • Implement C-PACE into your commercial real estate project
  • Minimize your cost of capital, enhance your global project cashflow and reduce transaction friction
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C-PACE Benefits: Minimize Risk and Cost of Capital

C-PACE Lowers Overall Cost of Capital

C-PACE financing lowers the weighted average cost of capital for development or redevelopment projects by replacing more expensive equity or mezzanine debt in the project capital stack with lower-priced C-PACE capital.

C-PACE Allows More Effective Recovery Alternatives

C-PACE financing provides flexibility in recovering project expenses either as an operating expense or as a real estate tax (RET) assessment on the property tax bill.

C-PACE Enables More Advantageous Balance Sheet Treatment

Because C-PACE financing has no acceleration terms, it is not generally treated as mortgage debt on the balance sheet and has minimal impact on debt-to-equity loan covenants.

Ebee Serves as a Reliable Source of Programmatic C-PACE Funding

C-PACE financing from Ebee is a reliable source of programmatic capital for funding large-scale energy-efficiency or renewable energy projects, both new construction and renovations, preserving internal capital for other core business operations.

Ebee has the experienced team, track record, committed capital and customized solutions ready to structure, finance and support all commercial real estate projects.

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Comparing C-PACE as an Alternative to Traditional Capital Stack

Let's look at an example to explore traditional versus C-PACE Financing on a hypothetical $5M project.

The cash flow analysis below shows that for a $5M project, traditional financing offers a net cash flow to property owner equity value of $97,500, equaling a 13% levered cash-on-cash return to property owner equity.

C-PACE Financing, on the other hand, provides a $177,500 net cash flow to property owner equity, with a 24% levered cash-on-cash return to property owner equity. Additionally, through C-PACE, the property owner's blended rate of debt is 5.24%, compared to 7.12% with traditional financing.

Traditional vs C-PACE Financing Scenario - $5M Project Size
Traditional Financing C-PACE Financing
Capital Stack
C-PACE Financing (20% LTV | 20% CLTV*) - $1,000,000
First Mortgage (65% LTV) $3,250,000 $3,250,000
Mezzanine Financing (20% LTV | 85% CLTV) $1,000,000 -
Property Owner Equity (15% LTV | 100% CLTV) $750,000 $750,000
Project Size ($5M) $5,000,000 $5,000,000
Cash Flow Analysis
Net Operating Income (8% Unlevered Yield) $400,000- $400,000
(Less) C-PACE Debt Service (6% Interest Rate - Priority Lien*) - (60,000)
(Less) First Mortgage Debt Service (5% Interest Rate) (162,500) (162,500)
(Less) Mezzanine Debt Service (14% Interest Rate - Subordinate to First Mortgage) (140,000) -
Net Cash Flow to Property Owner Equity $97,500 $177,500
Levered Cash-on-Cash Return to Property Owner Equity 13% 24%

* C-PACE is priority lien and paid prior First Mortgage and Mezzanine Debt

A Full Service, Process Approach to Analyzing, Financing, Engineering, and Managing Energy-Efficient Commercial Projects

Ebee delivers a process designed to produce meaningful results to financing and developing commercial projects involving energy and water efficient retrofits, redevelopments, and new construction.

Our proprietary process and unique financing program leveraging C-PACE helps our clients afford start-to-finish energy savings projects. From analysis, to financing, planning, and construction management, we work with clients to achieve positive cash flow for their facility upgrades while saving time, energy, and resources.

100+ Projects Nationwide 40+ Years Combined Experience

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Contact our team to learn more, or schedule a discovery call to discuss your next project.