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A specific type of loan that helps commercial building owners pay for major improvements to save energy or water, add renewable energy or improve resiliency is seeing tremendous growth in what has arguably been a difficult 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 and requires local leaders to pass enabling legislation. The loan amount is added to the property tax bill and is repaid over a long period (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 investment reached nearly $10 billion, according to PACENation, a nonprofit that says it advocates for C-PACE funding.
However, growth has actually accelerated over the past five years (with C-PACE loans posting double-digit gains) as more states pass policies enacting the program and more homeowners and lenders adopt the tool to finance projects. 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 deals in 2025 alone and has originated more than $5 billion in total. In September, Nuveen closed its second-largest C-PACE transaction to date for $290 million for the Pendry Hotel & Residences in Tampa, Florida. The closing also marked the first C-PACE-funded transaction in the city of Tampa.
Nuveen said improvements funded by its C-PACE loan have saved more than 300,000 metric tons of carbon dioxide.
But it's not just about the environment, and lenders are quick to admit this, especially as the political winds shift away from decarbonization.
“The underlying need to make properties more resilient and more efficient to operate doesn't really go away,” said Alexandra Cooley, CEO and CIO of Nuveen Green Capital, a subsidiary of Nuveen. “Actually, the vast majority of projects we see (last I checked it was 97%) are some combination of energy efficiency, which reduces property operating costs, or climate resilience. So a very small percentage is actually renewable energy.”
In fact, it is the mechanism that is increasingly attractive to lenders in an environment of higher and longer interest rates, where economic policy uncertainty has hit traditional CRE bank lending hard. For institutional clients who want long-term fixed rate exposure, it is attractive because C-PACE loans are secured by a higher tax assessment on real property.
“Our borrower is really the property itself, not necessarily the owner of that property at any given time. So it's safer and it allows our investors, who are long-term investors, to have that duration,” Cooley explained.
Another major player in the space, Peachtree, closed its largest deal with C-PACE, 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 these renovations retroactively so that owners could reduce their senior loan obligations, another benefit of the C-PACE product.
“They can be used as a bailout capital mechanism, where a new development project recently opened, a newly developed hotel property, a multifamily property, any type of commercial real estate property, and technically a retroactive C-PACE loan could be provided 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 an economic development tool at a time when “capital markets for commercial real estate are broken.”
“Banks represent 50% of the commercial real estate lending market. Banks tend to be the lenders of choice for new construction and new development projects, and they simply 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 aggregate and securitize the loans.
“We have many insurance companies that will invest in these securitizations,” he added.
While C-PACE lenders are less focused on the “green” aspects of lending, they are still drawn to “resilience.”
C-PACE loans can be made to finance energy efficiency improvements, which saves money overall and makes the building more valuable, but they can also be made to improve the resiliency of the building. That includes against floods, fires and even earthquakes. This is also attractive to investors as climate disasters become increasingly extreme.
Cooley said he sees three things driving expansion in this space: more states adopting C-PACE programs, market education and awareness, and investor interest.
“As institutional investors have come in, the cost of capital and C-PACE structure have become much more attractive to the commercial real estate industry,” he said.
