Owners and Developers
C-PACE: A Straightforward Financing Solution for Energy Efficient Construction
Commercial Property Assessed Clean Energy (C-PACE) is a relatively new and quickly growing alternative financing mechanism for businesses of all sizes. C-PACE makes it possible for owners and developers of commercial properties to obtain low-cost, long-term financing, which is paid back through an annual assessment on the organization’s property tax bill.
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Benefits for Owners and Developers
This alternative financing mechanism allows owners and developers to finance building retrofits, gut rehabilitations, and new construction with no upfront costs. In addition, eligible projects can be funded retroactively to replace more expensive financing.
When owners and developers utilize C-PACE financing, they create builds that are not only higher performing and more comfortable, but also cost-effective and competitive. They’re boosting their project’s long-term sustainability because they are able to afford higher quality materials and building measures, making for a better long-term investment.
Utilized for new construction and retrofits
Covers a variety of products including HVAC, roofing, solar, and more
Develop buildings that are cost-effective, energy efficient and higher quality
C-PACE Compared to the Competition
When you use C-PACE to finance your energy efficient construction or retrofit, you receive a longer financing term, lower interest rate, and annual or semi-annual payment schedule that fits your business' goals.
| COST OF CAPITAL | COST OF CAPITAL | EQUITY | MEZZ | C-PACE |
|---|---|---|---|---|
| Senior Debt1 | 4.50% | $30.0 | $30.0 | $30.0 |
| Mezz2 | 14.00% | - | $14.0 | - |
| C-PACE3 | 6.50% | - | - | $11.5 |
| Equity4 | 18.50% | $20.0 | $10.0 | $10.0 |
| Total Sources | - | $50.0 | $54.0 | $51.5 |
| RETURNS | ||||
|---|---|---|---|---|
| WACC | - | 9.9% | 9.5% | 7.6% |
| IRR | - | 17.9% | 12.2% | 25.2% |
| Equity Cash on Cash Multiple | - | 2.1x | 1.8x | 2.8x |
- 60% LTC, includes senior interest revenue
- $10M loan plus 18 month prepaid interest reserve
- The preferred return is allocated to project owner so this does not reduct FCFE; As a result, there is a higher WACC is driven by the pref % but the return is higher than the Mezzanine Financing scenario
- Interest-Only
| Features and Benefits | MEZZ | C-PACE |
|---|---|---|
| Typical Financing Term | 3 - 5 years | 15 - 30 years |
| Typical Interest Rate | 10% - 15% | 6% - 7% |
| Payment Schedule | Monthly | Annual or Semi-Annual |
| Balloon Payment, Amortization | Yes, interest-only | No, fully amortizing |
| Security Interest | Pledge of Borrower Equity | Assest only, no UCC filing |
| Transferability of Obligation | No | Yes |
| Pass Through to NNN Tenants | No | Yes |
| Delay First Payment (Capitalized Interest) | No | Yes, up to 2 years' interest for larger projects |
| Off-Balance Sheet Financing | No | Possibly* |
| Acceleration of Principal Balance | Yes, upon default or foreclosure | No |
| Financial/Operating Covenants | Yes | No |
| Out of Pocket Equity Required | Sometimes | No |
| Personal Guarantee | Sometimes | No** |
- Client's accounting resources to review and finalize accounting treatment
- Non-resource after construction
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 process consulting, we work with clients to achieve positive cash flow for their facility upgrades while saving time, energy, and resources.
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Contact our team to learn more, or schedule a discovery call to discuss your next project.
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