Where C-PACE Financing Creates an Edge in Multifamily — Insights from Loren Biller

How is C-PACE financing changing the capital stack for multifamily developments? 

Across all commercial asset classes (including multifamily), we do everything from filling in senior loan proceeds gaps, to blending down the cost of high yield bridge debt, to paying down maturing construction debt, and more. On a recent deal, our funds were used to pay down a sponsor’s senior loan and free up a relationship lending limit with a bank for other projects – and for a multifamily development in Philadelphia, we partnered with another lender to complete the capital stack and blend down cost of capital. C-PACE really is the chameleon of the capital stack. 

 

Can you walk us through a recent multifamily deal (or type of deal) in Florida or the broader Southeast where C-PACE played a pivotal role in closing or differentiating the transaction? 

One interesting use case for C-PACE is conversions, which can be complex transactions to put together and therefore need flexible financing. We financed the adaptive reuse of a hotel to attainable workforce housing near Disney World, Infiniti Lofts, where we came in to push the borrower’s leverage, increase their cost of capital, and reduce their recourse exposure. C-PACE is attractive for conversion deals like Infiniti Lofts and The Stella office-to-multifamily conversion in the Twin Cities because it covers heating, electrical, and plumbing infrastructures, which often undergo significant changes in adaptive reuse transactions, and it covers them with an up to 30-year amortization period. For Infiniti Lofts, it just made sense. 

 

Considering where the money is flowing today, how do you position C-PACE financing between senior debt, mezzanine, and equity — and how receptive are lenders and investors to that structure currently? 

We’re always looking at how many lenders have consented to C-PACE, since it functions as a tax lien and therefore needs the senior lender to agree to C-PACE being in the deal. As of September, we saw a 21% year-over-year increase in deals that closed with new consenting lenders for the past trailing 12 months. Over that same period, we had over 100 new lenders that were interested in utilizing C-PACE on their deal, so it’s safe to say that lenders are becoming more receptive to this financing tool every year. 

Local banks and credit unions dominate the C-PACE space at over 50% of deals, but private money lenders and debt funds are getting increasingly involved in C-PACE deals at about 18-20% of the market. We’re come in on several deals alongside A-notes, credit unions, and banks – C-PACE can pair with a variety of mortgage debt. 

C-PACE remains a more affordable alternative to high-octane mezzanine debt and pref equity, but everybody wants to talk about equity. In today’s market, you have to consider every capital source, but our production numbers show that more people are bringing C-PACE into their deals. 

 

From your lens, how are evolving sustainability/ESG requirements (or investor expectations around them) creating new windows of opportunity (or risk) for multifamily operators and developers in this region? 

While C-PACE isn’t used exclusively for sustainable building improvements (as long as your building is up to code, we cover most operational expenses, from elevators and building envelope to plumbing infrastructures), we expect a spur of interest due to timelines associated with the One Big Beautiful Bill (OBBB) and the expiration of clean energy credits. 

Most renewable projects will need to start before July 4, 2026, and be in service by January 1, 2027, to qualify for certain federal tax credits. Those projects can be fully financed through C-PACE (and the tax credit can go directly into the borrower’s pocket), so we are seeing more projects that want to take advantage of getting the tax credit in addition to getting 100% financing move more quickly toward the closing table. 

 

With interest rates elevated and traditional financing under pressure, what are some of the common hurdles you see when introducing alternative capital like C-PACE into a multifamily deal’s underwriting and closing timeline? 

The main hurdle with C-PACE is lender consent, which all comes down to education. These are the main points we stress when explaining why senior lenders should consent: 

• Reduce mortgage lender exposure to certain deals 
• Increased mortgage lender deal capacity 
• Eliminate the need for a participant bank 
• Pay down/pay off existing construction loans 

 

Looking toward 2026 and beyond, how do you see C-PACE and other non-traditional financing tools evolving in the Southeast multifamily market — what’s next on the horizon? 

I see alternative financing like C-PACE picking up momentum throughout the Southeast – and the rest of the country – as market volatility stays strong. We’re already seeing borrowers and lenders use C-PACE more and more, and don’t expect that interest to wane as awareness spreads. C-PACE is here to stay!

 

Get ready to hear from the Southeast’s most influential multifamily leaders on December 4^th at Connect Southeast Multifamily. Join us to hear from and connect with the power players shaping the region’s growth — from top developers and investors to the most prominent lenders, owners, and advisors who are defining the next wave of opportunities. www.ConnectSEMF2025.com