Increase your portfolio’s value
PACE makes it possible for owners of commercial, industrial, multifamily, and nonprofit properties to obtain low-cost, long-term financing for energy efficiency, water conservation, renewable energy projects, and more.
In most states, to use PACE for commercial buildings, the owner must obtain consent from the property’s existing mortgage lender. To date, many PACE lenders have consented. These mortgage lenders see the value of PACE because it adds to the value of the building stock that underlies their mortgages. Furthermore, a 2015 study showed that PACE increases the value of homes.
To learn more about how PACE works, see “What is PACE?”
- Hundreds of commercial lenders have allowed PACE liens to take a priority position on their mortgaged properties because they see that PACE improvements create value for themselves, their properties, and their clients. These lenders — which have included regional banks and major institutions across the country — recognize that critical efficiency upgrades and solar installations improve the quality and value of their building stock. In applicable cases, these improvements also improve tenant comfort and can lead to higher rents.
- Residential properties also benefit from PACE improvements: a 2015 study published in the Journal of Structured Finance by economists Laurie Goodman and Jun Zhu showed that, by three different methodologies, homes with PACE improvements sold for more than comparable homes, even after taking into account the financing costs.
- PACE assessments do not accelerate, which means that PACE runs with the land and the entire portion of the assessment does not come due upon sale or refinance of a property. For this reason, only the unpaid portion of a PACE assessment becomes senior to other liens on a property, in the same manner as unpaid municipal taxes.
- While underwriting processes vary between PACE programs, PACE assessments typically do not exceed 10-15% of a property’s value. As a result, PACE exposure in any given year is usually no more than 0.5 to 1% of the property’s value, given a PACE term of 20 years. PACENation’s Consumer Protections Policies, which have been adopted by major residential PACE programs, stipulates that the yearly PACE assessment plus all property taxes can not exceed 5% of the property’s fair market value, and that the PACE assessment must not exceed 15% of the property’s value, among other restrictions.
- In many cases, the long payback periods of PACE assessments allow projects to be cash-flow positive from day one, which puts money into the building owner’s pocket and improves their ability to make mortgage payments.
*This is a partial list of banks that have provided consents. This list does not reflect institutional views of the listed banks. Updated July 2017.
“Lender consent” means gaining the support of an existing mortgage lender for a PACE project, and is widely considered a best practice for commercial PACE projects. A lender’s consent may be required by state PACE enabling statutes, and even if not, most PACE programs, project funders and building owners themselves require the support of an existing lender before proceeding with a PACE project.
Why would a mortgage lender allow a PACE assessment to be senior to its lien on a mortgaged property? There are many reasons, and to date over 100 mortgage lenders have found that approving PACE funded projects makes sense. Download the one-pager to learn more.
PACE funded $1.8m efficiency improvements at San Fran’s 644 Broadway
MI building saves money and energy for the owner and for tenants
CA hotel financed efficiency upgrades with $6.8m PACE financing
Through San Francisco’s PACE program, we absolutely realized the power of PACE — the building has become more valuable not only from a financial point of view but from a people’s standpoint. Our vision for the project was to create a creative and cultural mecca, which we’ve done!Jeff Lee, Principal, Cypress Properties Group
Prologis is participating in the PACE program in order to promote new, innovative solutions for financing sustainable building improvements. It provides the flexibility to drive more energy improvement programs and that’s something everyone should embrace.Jack Rizzo, Managing Director, Global Construction and Renewable Energy, Prologis Inc.
PACE is the only funding mechanism that is credible in providing verifiable information to our investors, and therefore is the ideal tool for us to move forward in becoming the gold standard in sustainable hotels.Make Davis, General Manager, Hilton Los Angeles/Universal City
Whitepaper: Benefits of PACE for Commercial Real Estate Companies
For commercial real estate property owners, PACE financing can remove the typical barriers to the implementation of energy efficiency improvements. In this whitepaper, George Caraghiaur explains how to take advantage of the many benefits PACE provides to commercial real estate companies.
PACE for Commercial Building Owners and Community Leaders: A Primer
Why use PACE? Learn more in our downloadable slides for presenting to commercial real estate companies and community leaders. These slides give a primer on PACE, how it works and why to use it, and the specific benefits of PACE for building owners and communities. Please download the slides that match your needs and share them with your constituents.