C-PACE CRE lending is suddenly seeing record deals

A unique type of loan is gaining traction in the commercial real estate market, helping building owners finance significant upgrades to reduce energy consumption, water usage, and enhance resilience. This loan, known as Commercial Property Assessed Clean Energy (C-PACE), has seen remarkable growth despite a challenging lending environment. Recently, Nuveen closed a record-breaking $465 million C-PACE deal for a landmark office-to-residential conversion in Washington, D.C., marking the largest C-PACE financing in history.

What is C-PACE?

C-PACE is a type of financing that differs from traditional bank loans, operating at the state level and requiring local leaders to pass enabling legislation. The loan amount is added to the property’s tax bill and repaid over an extended period, often up to 20 or 30 years. This repayment structure makes energy-saving projects more affordable, as payments are spread out at fixed rates, and upgrades can lower operating costs and increase property value. Between 2009 and 2024, cumulative C-PACE investment reached nearly $10 billion, according to PACENation, a nonprofit that advocates for C-PACE financing.

Growth and Adoption

The growth of C-PACE lending has accelerated over the past five years, with double-digit gains, as more states pass policies enacting the program and more owners and lenders adopt the tool for financing projects. Currently, 40 states have C-PACE policies, with 32 active programs, up from six active programs in 2015. Nuveen, a leading C-PACE lender, closed $2.1 billion in C-PACE loans across 53 deals in 2025 alone and has originated over $5 billion in total. The company’s C-PACE lending has saved over 300,000 metric tons of carbon dioxide, demonstrating the program’s environmental benefits.

Benefits Beyond Environmental Impact

While C-PACE lenders acknowledge the environmental benefits, they also emphasize the program’s appeal beyond decarbonization. The underlying need for making properties more resilient and efficient doesn’t disappear, even as political winds shift. According to Alexandra Cooley, CEO and CIO of Nuveen Green Capital, 97% of C-PACE projects focus on energy efficiency or climate resiliency, which can help reduce operating costs and increase property value. The C-PACE mechanism is attractive to lenders in a higher-for-longer interest rate environment, as it provides long-term, fixed-rate exposure secured by a senior tax assessment on a piece of real property.

Market Players and Opportunities

Other major players in the C-PACE space, such as Peachtree, are also seeing significant growth. Peachtree closed its largest C-PACE deal, a $176.5 million loan for the Rio Hotel & Casino in Las Vegas, Nevada, for renovations completed in 2024. The loan was structured to finance these renovations retroactively, allowing the owners to reduce their senior loan obligations. C-PACE loans can be utilized as a rescue capital mechanism, helping to recapitalize projects and pay down bank or lender financing. As the commercial real estate lending market continues to evolve, C-PACE is emerging as a vital economic development tool, offering a unique solution for building owners and investors alike.