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A specific type of loan that helps commercial building owners finance large improvements aimed at saving energy or water, adding renewable energy or improving resiliency is seeing enormous growth in an arguably challenging lending environment.
This month, Nuveen closed a $465 million C-PACE deal for The Geneva, a historic office-to-residential conversion in Washington, DC. The transaction represents the largest C-PACE financing in history.
C-PACE, which stands for Clean Energy Assessed Commercial Property, is a type of financing that differs from a traditional bank loan. It operates at the state level, requiring local leaders to pass enabling legislation. The loan amount is added to the property tax bill and repaid over a long period of time (often up to 20 or 30 years). This can make energy-saving projects more affordable because payments are spread out, usually at fixed rates, and improvements can reduce operating costs and increase property value.
Between 2009 and the end of 2024, cumulative C-PACE investments reached nearly $10 billion, according to PACENation, a nonprofit organization that says it advocates for C-PACE financing.
However, growth has truly accelerated over the past five years – with C-PACE loans seeing double-digit gains – as more states adopt policies implementing the program and more owners and lenders adopt the project financing tool. Currently, 40 states have C-PACE policies with 32 active programs, up from six active programs in 2015.
Nuveen closed $2.1 billion in C-PACE loans across 53 transactions in 2025 alone and generated more than $5 billion in total. In September, Nuveen completed its second largest C-PACE transaction to date, at $290 million, for the Pendry Hotel & Residences in Tampa, Florida. The closing also marked the first C-PACE-financed transaction in the City of Tampa.
Nuveen said improvements funded by its C-PACE loan saved more than 300,000 tons of carbon dioxide.
But it’s not just about the environment, and lenders are quick to admit that, especially as the political winds shift away from decarbonization.
“The underlying need to make properties more resilient and more efficient to operate really isn’t going away,” said Alexandra Cooley, CEO and CIO of Nuveen Green Capital, a subsidiary of Nuveen. “In fact, the vast majority of projects we see – last time I checked it was 97% – are a combination of either energy efficiency, which reduces the operating costs of the property, or climate resiliency. So a very small percentage is actually renewable energy.”
This is actually the mechanism that is increasingly attractive to lenders in a higher and longer interest rate environment, in which economic policy uncertainty has hit traditional CRE bank lending hard. For institutional clients who want long-term, fixed-rate exposure, this is attractive because C-PACE loans are secured by a senior tax assessment on a property.
“Our borrower is actually the property itself, not necessarily the owner of that property at any given time. So it’s more secure and it allows our investors, who are long-term investors, to have that duration,” Cooley explained.
Another major player in the industry, Peachtree, closed its largest C-PACE deal, a $176.5 million loan for the Rio Hotel & Casino in Las Vegas, Nevada, for renovations that were actually completed in 2024. The loan was structured to fund those renovations retroactively, so owners could reduce their senior loan obligations, another benefit of the C-PACE product.
“They can be used as a rescue capital mechanism, when you’ve recently opened a new development project, a new hotel property in development, a multifamily property, any type of commercial real estate property, and you can technically provide a retroactive C-PACE loan to help recapitalize that project and help repay the bank or lender that financed the project,” explained Greg Friedman, CEO of Peachtree Group.
Friedman said he sees C-PACE as a tool for economic development at a time when “financial markets for commercial real estate are broken.”
“Banks make up 50% of the commercial real estate lending market. Banks tend to be the lender of choice for new construction and new development projects, and they just don’t lend at the same level,” he said.
C-PACE is very profitable for Peachtree as a business, Friedman said, because the company can consolidate and securitize loans.
“Many insurance companies will invest in these securitizations,” he added.
Even though C-PACE lenders focus less on the “green” aspects of lending, they are still attracted to “resilience.”
C-PACE loans can be made to finance energy efficiency improvements, saving money overall and increasing the value of the building, but they can also be made to improve the resiliency of the building. This includes against floods, fires and even earthquakes. This also appeals to investors at a time when climate disasters are becoming more and more extreme.
Cooley said she sees three factors driving expansion in this sector: more states adopting C-PACE programs, market education and awareness, and investor interest.
“As institutional investors came in, the cost of capital and structure of C-PACE became much more attractive to the commercial real estate industry,” she said.