C-PACE Recap Strategies

In today’s real estate environment, efficient capital management is essential. Market volatility, fluctuating interest rates, and tightening lending standards have made traditional refinancing solutions less attractive, prompting commercial property owners and developers to seek strategic alternatives. 

One such alternative is recapitalization through C-PACE (Commercial Property Assessed Clean Energy) financing, a powerful tool that allows property owners to recapture equity, replace high-cost debt, and take advantage of deferred payments, even during a lengthy lease-up period. 

The Role of C-PACE in Recapitalization 

C-PACE is widely recognized for financing energy-efficient upgrades and renewable energy building improvements. But beyond these conventional uses, savvy building owners are using C-PACE as a strategic recapitalization mechanism. A few strategies: 

  • Replace expensive debt, such as bridge loans, mezzanine financing, or preferred equity with lower cost C-PACE, which also boasts a fixed-rate 20-30 year term
  • Manage cash flow with deferred payments until stabilization
  • Recapture invested equity used for previously funded building improvements
  • Preserve liquidity for future investments with capitalized interest through the lease-up period 

By leveraging C-PACE to restructure debt, commercial real estate owners can improve short-term project economics and long-term capital management. 

Strategic Applications of C-PACE Recapitalization 

Post-Construction Refinancing 

Many commercial developments face financial pressure following project completion, particularly when lease-up periods are extended or cost overruns impact initial budgets. Recapitalization using C-PACE provides a cost-effective refinancing option, allowing property owners to reclaim previously invested capital and carefully manage cash flow. 

Interior of office building with many windows with caption "$50 Million"

Case Study: A Class A office development secured $50 million in post-construction C-PACE financing with deferred payments, enabling a gradual lease-up period without the need for additional equity injections.

Paying Off or Extending Maturing Loans 

When construction or bridge loans reach maturity before a property achieves full stabilization, refinancing options may be limited. C-PACE can relieve pressure when used as an alternative to expensive debt, allowing developers to pay off maturing debt or extend debt terms with more favorable conditions. 

Interior of high-end mall with caption: "$25 Million"

Case Study: A mixed use development used $25 million in C-PACE financing to replace existing construction financing from a debt fund. By using lower cost C-PACE, they covered lease-up expenses with no payback due until they reach stabilization.

Funding Cost Overruns & Debt Service Reserves 

Unexpected project costs can place significant financial strain on commercial developments. Instead of relying on short-term, high-cost financing, C-PACE recapitalization can provide a structured capital solution to manage cost overruns, replenish debt service reserves, and restructure outstanding obligations. 

SIXTY Hotel DC

Case Study: A large-scale renovation project leveraged mid-construction, long-term C-PACE funding to efficiently pay off a debt fund while continuing construction, preserving liquidity for future phases of development.

Financial & Strategic Benefits of Recapitalization 

Recapitalization through C-PACE pairs building efficiency with capital efficiency. PACE Equity provides tailored financing solutions designed to enhance project economics and reduce reliance on costly debt options. 

  • Long-Term, Fixed-Rate, Non-Recourse Financing – Repayment terms extend up to 30 years, reducing debt service burdens.
  • Lower WACC – C-PACE reduces overall capital costs with lower-rate financing that replaces high-cost debt and outside equity. 
  • Seamless Integration with Capital Stacks – Works alongside NMTC, TIF, OZ, HTC, EB-5, and other tax credits and incentives. 
  • Flexible Exit Strategies – Prepayment options provide a pathway for transitioning to alternate long-term financing. 
  • Green certified buildings receive preferred C-PACE rates through PACE Equity’s CIRRUS financing program. 

Maximizing Capital Efficiency with PACE Equity 

With ever-changing real estate markets, developers and property owners need financial options that provide flexible structures to address a variety of capital needs. The PACE Equity adaptive financing model enables recapitalization at various stages of development — pre-construction, mid-construction, lease-up, or stabilization — that offers a strategic edge in financial structuring. Using C-PACE allows building owners to enhance financial flexibility and drive long-term asset performance. 

For more information on how PACE Equity’s recapitalization solutions can be integrated into commercial real estate capital structures, contact us.