C-PACE and CMBS

Commercial Property Assessed Clean Energy (C-PACE) is a financial instrument secured by a public assessment on commercial real estate collateral designed to assist commercial real estate property owners with the financing of building improvements and upgrades that result in energy and water savings, or other sustainable benefits, such as building resiliency. Even as C-PACE lending activity has flourished in the past five years, it has largely remained out of the broader public capital markets activity, which could be attributed in part to a lack of uniformity between the various programs across the United States. As an increasing number of states allow C-PACE financing, DBRS Morningstar expects C-PACE to gain wider acceptance as an economical way for property owners to fund critical resilience and energy improvement investments. Aging properties securitized in CMBS are likely to benefit from resulting efficiencies that accrue to property owners, tenants, and the environment.