Upcoming Connect Texas Multifamily Panelist Previews C-PACE Financing

In the run-up to the Connect Texas Multifamily event in Dallas on August 20th, we reached out to several conference participants to get their pulse on various commercial real estate issues. We caught up with Loren Biller from Pace Loan Group and asked him about commercial property-assessed clean energy (C-PACE) financing.

Banks and other traditional lenders have been pulling back on debt for certain property types. How does C-PACE financing help borrowers get deals done?

LB:   C-PACE is filling gaps in today’s financing market.  For construction loan scenarios, I can lend up to 25% to 35% of value, depending on the state.  If a bank is capping leverage in the 50% range or less, PACE Loan Group will provide capital to help cover the proceeds shortage, helping borrowers preserve equity.  And I can fix my rate for a term of up to 30 years, depending on the state.  

What would a “perfect” C-PACE loan request look like in your opinion? 
LB:  In a perfect world, new construction or adaptive re-use in an undersupplied submarket, and a senior lender that is open to C-PACE!  But really I like any scenario where there is an interesting opportunity, or problem that needs to be solved, and some parties at the table that want to work together to figure it out. 

What do borrowers need to support their case in the current environment that they may not have required in a lower-interest-rate environment?
LB:  Because of high interest rates, developers now have to focus on projects with a higher yield on cost.  So most deals getting out of the ground are located in submarkets with tangible unmet demand.  People are not “taking a flyer” on marginal deals just because capital is widely available.  I like MSAs with good countercyclical employment bases (government, education, medicine), and that haven’t been overbuilt in the past few years.  

Are you finding that borrowers have become more creative in securing debt and equity for their projects or are they expecting the lender to supply the creativity?
LB:  The most successful people in this business are constantly looking for new and better ways to make things happen.  Developers in particular are always value-engineering and optimizing their deals.  And in tough parts of the cycle like we’re in now, unique concepts like C-PACE find their footing.  We are definitely seeing more and more people engage with us in a collaborative way, to figure out how to make their deals work.

Register to hear from Loren and other leading experts in multifamily lending, dealmaking, and more, at Connect Texas Multifamily in Dallas on August 20th.