MREJ: PACE – The chameleon of CRE financing

One bright spot in an otherwise dreary capital markets environment has been the continued emergence and success of PACE (Property Assessed Clean Energy) financing, a surprisingly adaptable funding source that has proved to be effective in varied market conditions.

PACE is a privately funded, long-term (20 to 30 years), low-cost, fixed-rate source of financing that can reduce equity, or senior debt, and boost returns. It is approved state-by-state and is available for properties and developments that have elements of energy efficiency, renewable energy, water conservation, flood mitigation and seismic retrofits.  One of the unique features of PACE is that it is secured by a special assessment lien instead of a mortgage, meaning the assessment can stay with the property through various owners over its term.

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