C-PACE Financing for Banks & Lending Partners
C-PACE can give banks another source of capital to help qualified commercial real estate borrowers complete their financing while allowing the bank to maintain its senior lending relationship.
Bayview PACE works alongside banks and commercial mortgage lenders to structure C-PACE around the needs of the borrower, the property and the senior lender.
Strengthen the Deal Without Increasing Bank Exposure
When a strong client needs additional proceeds, the choice does not always have to be between increasing the bank’s exposure and losing the transaction.
C-PACE can fill a portion of the capital stack with long-term, fixed-rate capital while allowing the bank to retain the senior loan and broader client relationship.
For banks, C-PACE may help:
Fills Capital Gaps
PACE fills gaps in the capital structure and is less expensive than other forms of capital.
Reduces Exposure
PACE can reduce the bank loan amount so banks can preserve capital.
Non-Recourse and Non-Accelerable
PACE is non-recourse and cannot be accelerated at any time.
No Intercreditor Agreements
PACE loans do not require intercreditor agreements.
Flexible Timing
PACE financing is applicable at any time during the property life cycle, ranging from new construction to retroactive financing.
Escrow Integration
Escrowing for PACE payments is recommended as they also escrow for insurance and taxes. This helps ensure that the PACE stays current and the security position is maintained.
Supports Relationships
PACE in the capital stack enables banks to continue the lending relationship with valuable clients while maintaining a healthy deposit-to-loan balance.
Transferable and Prepayable
PACE loans can transfer upon sale of a property or be prepaid at any time.
Where C-PACE Can Fit
C-PACE can be incorporated into commercial real estate transactions at multiple points in the property lifecycle, depending on the applicable program and project eligibility.
- New Construction
- Pair C-PACE with a construction loan to help complete the development capital stack.
- Mid-Construction
- Address qualifying project costs or financing gaps that arise after construction has begun.
- Renovation & Repositioning
- Finance qualifying improvements while the bank maintains the existing mortgage relationship.
- Recapitalization
- Use qualifying historical expenditures to introduce long-term capital into an existing financing structure.
Why Banks Partner With Bayview PACE
C-PACE is only one component of a commercial real estate transaction. Bayview understands the rest of the capital stack too.
As part of a broader institutional commercial real estate lending platform, Bayview can evaluate both C-PACE and traditional CRE debt, giving our team a lender’s perspective on structure, underwriting and execution.
Our approach is built around:
- Understanding the senior lender’s credit considerations
- Structuring C-PACE within the complete capital stack
- Coordinating with borrowers, lenders and program administrators
- Providing clear documentation for lender and credit committee review
- Helping all parties identify issues early in the process
- Supporting a coordinated path from initial review through closing
Whether Bayview provides the C-PACE component alone or participates more broadly in the financing, we approach the transaction with both the borrower and senior lender in mind.
Understanding C-PACE Lender Consent
For properties with existing mortgage financing, senior lender consent is generally an important part of the C-PACE process.
Bayview seeks consent from secured mortgage holders and works directly with lenders to help their teams understand the financing structure, assessment mechanics and implications for the senior loan.
Key considerations typically include:
Non-Acceleration
The entire outstanding C-PACE balance does not become immediately due because of a payment default. The treatment of delinquent installments is governed by the applicable C-PACE program and jurisdiction.
Assessment Structure
C-PACE is repaid through a property assessment structure rather than a traditional subordinate mortgage loan.
Lender Review
The senior lender can evaluate the proposed C-PACE financing, property economics, repayment obligations and overall capital structure before providing consent.
Escrow Coordination
C-PACE payments can be incorporated into the property’s payment and escrow processes where appropriate.
Transfer & Prepayment
Depending on the financing documents and applicable program, C-PACE may remain with the property following a sale or may be prepaid.
A Capital Partner, Not a Competitor
The objective of a Bayview bank partnership is not to replace the bank.
It is to help the bank stay in the transaction.
C-PACE can provide incremental capital when a bank does not want to increase its own loan proceeds, allowing the lender to maintain the senior relationship while another part of the capital stack addresses the financing gap.
This can be particularly valuable when a bank wants to:
- Maintain an important borrower relationship
- Preserve deposits and other banking relationships
- Limit concentration or project-level exposure
- Increase total proceeds available to the borrower
- Compete for transactions requiring a more creative capital structure
C-PACE in Action: A Bank Partnership
Master’s Transportation
Kansas City, Missouri | Industrial New Construction
$20.1 Million C-PACE Financing
Bayview PACE provided $20.1 million in C-PACE financing for the construction of Master’s Transportation’s 324,000-square-foot headquarters and industrial facility.
Simmons Bank provided a $31 million construction loan, while the sponsor contributed $20 million in equity.
By incorporating C-PACE into the capital stack, the bank was able to retain the project proceeds and deposits without bringing in an additional participant, while providing the borrower with greater total leverage.
How a Bayview Bank Partnership Works
1. Identify the Opportunity
The bank, sponsor or advisor identifies a transaction where C-PACE may help address a capital need.
2. Review the Transaction
Bayview evaluates the property, borrower, project costs, existing financing and applicable C-PACE program.
3. Structure the Capital Stack
Bayview works with the parties to determine appropriate C-PACE sizing and how the financing interacts with the senior loan.
4. Coordinate Lender Consent
Bayview provides the information and documentation needed to support the lender’s internal review and consent process.
5. Close Together
Bayview coordinates with the bank, borrower, program administrator and other parties to move the transaction toward closing.
Give Your Borrowers Another Financing Option
When a commercial real estate client needs more capital than the bank wants to provide on its own balance sheet, C-PACE may offer another path forward.
Bayview PACE works with banks and commercial lenders to evaluate opportunities, structure the capital stack and help move qualified transactions toward closing.
Connect with Bayview PACE to discuss a current transaction or learn how C-PACE could complement your CRE lending platform.
Ready to get started with
C-PACE Financing?
Or do you have additional questions? Connect with our team.
Ready to get started with
C-PACE Financing?
Or do you have additional questions? Connect with our team.