C-PACE financing requires consent or acknowledgment by existing lienholders. We don’t want our clients closing on PACE loans that could trigger an Event of Default with other lenders. Most developers and property owners ask us why Lenders consent to PACE financings that give PACE assessments a superior lien status to their own. In fact, over 80% of C-PACE Lender Consent requests are approved and banks are routinely consenting multiple times.
Why Do Banks Consent to C-PACE Financing?
- PACE funds pay for measures that reduce energy cost and can increase the NOI of a property (improves the collateral value of the asset)
- PACE funds are used to modernize buildings that improve the marketability of the building for leasing, re-leasing and sale
- PACE funds help bank borrower clients do more projects and diversify risk
- PACE funds help fill financing gaps to get a project started
- C-PACE loans do not accelerate. If a property is foreclosed by a bank or first lienholder, the bank will only need to pay the PACE assessment each year when due like they do with property tax. The bank has full control of the foreclosed asset
- Banks will only consent to PACE financings when the current or projected cash flow from the property (including the energy and operating savings from the installed PACE measures) is sufficient to meet their Debt Service Coverage ratios
- Assisting their borrower clients with other financing tools is good business for banks
We work with our clients and their senior lenders to obtain Lender Consent/Acknowledgment of a PACE financing early in the process.