Commercial real estate owners and developers are facing rising costs, tighter lending constraints and refinancing challenges. Therefore, finding efficient ways to fill gaps in the capital stack has become a determining factor in the viability of a project.
In an article published by the Mortgage Bankers Association’s Commercial/Multifamily NewsLink, Christopher Hoeffel, President and Chief Operating Officer of Counterpointe Sustainable Real Estate (CounterpointeSRE), examines how C-PACE financing can function as an alternative to preferred equity and mezzanine debt.
Traditionally, property owners have relied on subordinate financing to bridge the gap between available mortgage proceeds and required equity. These structures can introduce higher financing costs, additional oversight and potential ownership dilution.
Through C-PACE’s long-term structure, however, owners can utilize property-assessed financing for eligible improvements without relinquishing ownership or introducing another party into property management and workout negotiations.
Hoeffel also addresses a common concern among senior mortgage lenders: whether C-PACE compromises their lien position. Unlike conventional subordinate debt, C-PACE assessments generally cannot be accelerated upon default, and only delinquent installments may receive priority through applicable property tax enforcement mechanisms. These distinctions are central to understanding how C-PACE fits within the capital stack.
“Since C-PACE poses little threat to a mortgage lender’s lien position, controls, rights and remedies, market participants might consider C-PACE proceeds as another form of owner equity.” Says Hoeffel.
Read the full article: Christopher Hoeffel: Using C-PACE as a Form of Equity in the Capital Stack — MBA NewsLink