Commercial Property Assessed Clean Energy (C-PACE) loans are a financing option for property owners to fund energy efficiency and renewable energy improvements. C-PACE loans are attached to the property, rather than the owner, which means that if the property is sold, the loan stays with the property and is repaid by the new owner. This feature of C-PACE loans, combined with strict underwriting standards, has resulted in a low risk of default.
Studies have shown that C-PACE loans have a low default rate, with one analysis finding a default rate of just 0.1%. This low default rate can be attributed to the fact that C-PACE loans are only available to property owners with good credit and sufficient equity in their property. In addition, C-PACE loans are only approved for projects that are expected to generate energy savings that are greater than the loan payments, ensuring that the loan is financially viable for the property owner.
C-PACE loans also have a strong repayment performance, with a high percentage of loans being repaid on time. This is due in part to the fact that C-PACE loans are structured as voluntary assessments, which means that the loan payments are collected through the property tax bill. This provides a reliable and consistent repayment mechanism, as property taxes are generally a high priority for property owners.
Overall, the low default rate and strong repayment performance of C-PACE loans demonstrate their reliability as a financing option for property owners looking to fund energy efficiency and renewable energy improvements. If you are a commercial property owner considering energy improvements, C-PACE loans may be worth considering as a financing option.