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:
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 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.
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.
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.Learn More
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
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.