C-PACE CRE lending is suddenly seeing record deals

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A special type of loan that helps commercial building owners pay for major improvements to save energy or water, add renewable energy or increase durability is seeing major growth in an allegedly tough credit environment.

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

C-PACE, which stands for commercial property assessed clean energy, is a different type of financing than a traditional bank loan. It operates at the state level and requires local leaders to pass authorizing legislation. The amount of the loan is added to the property’s tax bill and is repaid over an extended period of time (usually up to 20 or 30 years). This can make energy-saving projects more cost-effective because payments are typically distributed at fixed rates and upgrades can lower operating costs and increase property value.

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

But growth has really accelerated in the last five years; C-PACE loans achieved double-digit gains; More states have adopted policies enacting the program, and more property owners and lenders have adopted the tool to finance projects. There are currently C-PACE policies in 40 states, with 32 active programs, up from six active programs in 2015.

In 2025 alone, Nuveen closed $2.1 billion in C-PACE loans in 53 deals and raised over $5 billion in total. In September, Nuveen closed its second-largest C-PACE transaction to date for $290 million for the Pendry Hotel & Residences in Tampa, Florida. The closing also marks the first transaction financed by C-PACE in the city of Tampa.

Nuveen said the improvements financed by the C-PACE loan saved over 300,000 metric tons of carbon dioxide.

But it’s not just about the environment, and lenders are quick to acknowledge that, especially at a time when political winds are shifting away from decarbonisation.

“The fundamental need to run real estate more resiliently, more efficiently is not really going away,” said Alexandra Cooley, CEO and CIO of Nuveen Green Capital, a subsidiary of Nuveen. “In fact, the vast majority of projects we see (it was 97% last time I checked) are a combination of either energy efficiency or climate resilience, which reduces the running costs of the property. So a very small percentage is actually renewable energy.”

This is essentially the mechanism that has become increasingly attractive to lenders in a higher long-term interest rate environment where economic policy uncertainty has hit traditional CRE bank loans hard. This is attractive to corporate clients who want a long-term, fixed-rate loan because C-PACE loans are secured by a senior tax assessment on a piece of real estate.

“Our borrower really is the property itself, he doesn’t necessarily own the property at any given time. So it’s safer and it allows our investors, who are long-term investors, to have that duration,” Cooley said. he said.

Another important player in the field, Peachtree, completed the largest C-PACE deal with a $176.5 million loan to the Rio Hotel & Casino in Las Vegas, Nevada, for renovations completed in 2024. The loan was structured to retroactively finance these renovations so owners were able to reduce their senior loan obligations, another benefit of the C-PACE product.

“They can be used as a rescue capital mechanism in situations where you have recently opened a new development project, a new development hotel property, a multifamily property, any type of commercial real estate property, and you can technically use a retroactive C-PACE loan to help recapitalize that project and pay off the debt of the bank or the lender that is financing the project,” said Peachtree Group CEO Greg Friedman.

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

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

Friedman said C-PACE was so profitable as a business for Peachtree because the company was able to aggregate and securitize loans.

“We have a lot of insurance companies that will invest in these securitizations,” he added.

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

C-PACE loans can be made to finance energy-efficient improvements that save money overall and make the building more valuable, but they can also be made to improve the durability of the building. This includes fighting against floods, fires and even earthquakes. As climate disasters become more extreme, this also becomes attractive to investors.

Cooley said he sees three things driving expansion in the space: More states adopting C-PACE programs, market education and awareness, and investor interest.

“As institutional investors have come in, the cost of capital and the structure of C-PACE has become much more attractive to the commercial real estate industry,” he said.