C-PACE CRE Lending is Suddenly Seeing Record Deals

A version of this article first appeared in the CNBC Property Play newsletter with Diana Olek. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. subscription To receive future issues, directly to your inbox.

A specific type of loan that helps commercial building owners pay for large improvements to save energy or water, add renewable energy, or improve resiliency is seeing explosive growth in what is arguably a challenging lending environment.

This month, Nuveen closed a $465 million C-PACE deal for the Hotel Geneva, a landmark office-to-residential conversion in Washington, DC. The deal represents the largest financing for C-PACE in history.

C-PACE, which stands for Commercial Real Estate Assessed with Clean Energy, is a type of financing that differs from a traditional bank loan. It operates at the state level, requiring local leaders to pass enabling legislation. The loan amount is added to the property tax bill and is repaid over a long period (often up to 20 or 30 years). This can make energy saving projects more affordable, because payments are spread out, usually at fixed rates, and upgrades can reduce operating costs and increase property values.

Between 2009 and the end of 2024, cumulative C-PACE investment has reached nearly $10 billion, according to PACENation, a nonprofit that says it advocates for C-PACE funding.

However, growth has actually accelerated over the past five years — with C-PACE lending posting double-digit gains — as more states pass policies enacting the program, and more owners and lenders embrace the project financing tool. Currently, 40 countries have C-PACE policies with 32 active programs, compared to six active programs in 2015.

Nuveen closed $2.1 billion worth of C-PACE loans across 53 deals in 2025 alone, generating more than $5 billion in total. In September, Nuveen closed its second-largest C-PACE deal to date at $290 million for the Pendry Hotel & Residences in Tampa, Florida. This closing also marks the first C-PACE-financed deal in Tampa.

Upgrades financed through C-PACE loans have saved more than 300,000 metric tons of carbon dioxide, Novin said.

But it’s not just about the environment, and lenders are quick to acknowledge this, especially as the political winds shift away from decarbonisation.

“The fundamental need to make real estate more flexible and more efficient in operation is not really going away,” said Alexandra Colley, CEO and CIO of Nuveen Green Capital, a subsidiary of Nuveen. “In fact, the vast majority of the projects we see — last I checked it was 97% — are a combination of either energy efficiency, which is reducing the operating costs of a property, or climate resilience. So a very small percentage is actually renewable energy.”

It’s a mechanism, in fact, that has become increasingly attractive to lenders in a longer-term higher interest rate environment, where economic policy uncertainty has hit traditional bank lending for real estate properties hard. For institutional clients who want long-term, fixed-rate exposure, it is attractive because C-PACE loans are secured by a high-profile tax assessment on a piece of real estate.

“Our borrower is actually the property itself, not necessarily the owner of that property at any given moment. So, it’s safer, and it enables our investors, who are long-term investors, to have that term,” Cooley explained.

Another major player in this space, Peachtree, closed its largest C-PACE deal, a $176.5 million loan for the Rio Hotel and Casino in Las Vegas, Nevada, for renovations that are actually completed in 2024. The loan is structured to fund these renovations retroactively, so the owners can reduce their senior loan liabilities, another benefit of the C-PACE product.

“It can be used as a capital rescue mechanism, where you’ve recently opened a new development, a new development hotel property, a multifamily property, or any type of commercial property, and you can technically get a retroactive C-PACE loan to help recapitalize that project and help repay the bank or lender that financed the project,” explained Greg Friedman, CEO of Peachtree Group.

Friedman said he sees C-PACE as an economic development tool at a time when “the capital markets for commercial real estate are broken.”

“Banks make up 50% of the commercial real estate lending market. Banks tend to be the preferred lender for new construction and new development projects, and they don’t lend to the same level,” he said.

C-PACE is very profitable for Peachtree as a business, Friedman said, because the company can package and securitize loans.

He added: “We have many insurance companies that will invest in these securitizations.”

While C-PACE lenders are less focused on the “green” aspects of the loan, they are still attracted to the “flexibility.”

C-PACE loans can be made to finance energy efficiency upgrades, which saves money overall and makes the building more valuable, but they can also be made to improve the resiliency of the building. This includes against floods, fires and even earthquakes. This is also attractive to investors as climate disasters become more serious than ever.

Cooley said she sees three things driving expansion in this area: more states adopting C-PACE programs, education and market awareness, and investor interest.

“With the coming of institutional investors, the cost of capital and C-PACE structure has become more demanding for the commercial real estate industry,” she said.