Category: Commercial PACE

The Philadelphia C-PACE Program reached a major milestone in 2025, surpassing $300 million in cumulative Commercial Property-Assessed Clean Energy (C-PACE) financing. Since the program launched, nearly half of the $312 million in capital provided to Philadelphia property owners has been deployed over the past two years.

• Learn more: Philadelphia C-PACE Program 2024–2025 Report

More property owners are turning to Philadelphia C-PACE than ever before. The program has supported a range of commercial, industrial, healthcare, and mixed-use multifamily developments. Over the past two years, the program has delivered 411 new rental units to Philadelphia’s housing market. Several projects involve repeat borrowers, underscoring growing confidence in the program and its ability to deliver value across project types.

“Record levels of C-PACE financing are strengthening the resilience and sustainability of high-performance buildings across the city,” said Lisa Shulock, Director of Commercial Programs. “Continued program growth reflects rising demand from property owners seeking flexible, low-cost capital to improve building performance, reduce operating costs, and lower carbon emissions.”

C-PACE financing enables property owners and developers to fund energy efficiency, water conservation, renewable energy, resiliency, and indoor air quality improvements. By deploying private capital, the program helps borrowers lower their occupants’ utility bills, improve health and safety, and future-proof their buildings.

“With the support of this business-friendly lending program, we were able to invest in energy-efficient infrastructure which would not be possible with traditional bank lending,” said Mike Rhoads, Vice President, Rhoads Industries.

2025 Project Highlights

The Philadelphia C-PACE Program closed financing on a diverse set of high-impact projects this year, including:

• Harper Square Tower – The largest C-PACE transaction in Pennsylvania to date, this $60-million project demonstrates how C-PACE can support large-scale development while advancing energy performance and long-term affordability.
• Ford Road Medical Center – An $11 million C-PACE investment enabled critical energy and building system upgrades at this medical facility, improving efficiency and resiliency.
• 7078 Lincoln Drive – In November, the Philadelphia Energy Authority, PACE Equity, and Lincoln 7078 LLC closed on $1.1 million in C-PACE financing for a new construction multifamily property. The five-story, 39,000-square-foot, mixed-use building will incorporate energy efficiency and water conservation measures, exceeding Philadelphia building code requirements by 23 percent. 

Program Updates

In response to evolving market conditions and to ensure continual program improvement, the Philadelphia C-PACE Program updated its guidelines in 2025. A key change expands refinancing eligibility, allowing property owners to apply for retroactive C-PACE financing up to three years after project completion, extending the previous two-year window and providing greater flexibility for completed projects.

The Philadelphia C-PACE Program remains a critical tool for unlocking private capital, strengthening building performance, and supporting new housing and economic development across the city. 

Reach out to see if C-PACE financing is right for your project: CPACE@philaenergy.org.

Stephen Arrivello, ExCorde Capital. PEA welcomes guest bloggers to submit articles related to C-PACE. PEA thanks Stephen for submitting this piece.

The Philadelphia C-PACE Program recently revised financing rules, enabling property owners to apply for retroactive funds as far as three years after project completion.

Under the existing retroactive financing rule, owners could extract capital from completed projects within a maximum two-year window. 

It may sound like a technical tweak, but the impact is immediate. Extending the retroactive window makes it far easier for commercial property owners to lower debt, stabilize operations, and reinforce the long-term strength of their buildings. 

Retroactive financing is worth owners’ consideration – especially in today’s capital market of high rates and tight lending.

Why a Three-Year Retroactive Window Is a Game Changer

Under the new rule, owners can more likely tap C-PACE at exactly the moment they need long-term, fixed-rate capital. Project stabilization simply takes longer today than under previous market conditions. Commercial projects often face:

• Slower lease-ups
• Construction delays
• Budget overruns
• Softer cash-flow ramp-ups

In many instances, the two-year lookback period expired just as buildings were turning the corner. The three-year rule better fits the realities of today’s commercial real estate market.

Afterall, it’s useful to recall the differences in the lending market three years ago compared to today. Many owners who began construction in 2021–2022 finished those projects in a dramatically different financial environment:

• Interest rates nearly tripled
• Senior lenders tightened loan-to-value (LTV) ratios
• Construction costs jumped 25–40 percent

Retroactive C-PACE financing helps owners address these challenges. By refinancing on projects with qualifying energy-efficiency or resilience improvements, owners can offset construction overruns, reduce high-cost capital, improve their debt-service-coverage ratio (DSCR), and generally do better at avoiding financial distress.

What This Update Means for Property Owners

The longer lookback period can be especially useful across a wide pipeline of recently completed projects: multifamily, mixed-use, hospitality, industrial, office repositionings, and more. Hundreds of buildings that missed the old deadline may now qualify.

C-PACE typically offers long-term, fixed-rate, non-recourse financing. Swapping out double-digit bridge, mezzanine, or preferred-equity capital for ~6–8 percent C-PACE financing can significantly improve project economics.

With many construction loans coming due, and lenders hesitant to refinance at previous values, owners need new capital options. Retroactive C-PACE can be used to:

• Pay down senior debt
• Reduce lender risk
• Improve DSCR
• Extend holding periods
• Prevent capital calls or forced sales

Owners who self-funded building improvements can also benefit. C-PACE is an option to refinance their equity and return capital to the balance sheet. Refinancing creates liquidity for new projects or presents an opportunity to stabilize the existing portfolio.

C-PACE financing can be applied toward a wide range of high-cost systems and materials ranging from the building envelope and roofing to heating, ventilation and air conditioning (HVAC) equipment. 

The Bottom Line

Extending retroactive C-PACE financing to three years is a targeted, pro-growth change that gives Philadelphia property owners meaningful flexibility in a difficult capital market. Now is the time for building owners to revisit eligibility and to assess whether retroactive C-PACE can strengthen their refinancing or recapitalization strategy.  

The revised retroactive financing rule opens the door for hundreds of recently completed projects to shore up their capital stacks and to reduce operating pressure. And, if the additional capital flow enables owners to invest in more C-PACE-financed developments, the revision will result in: reduced energy consumption, fewer carbon emissions, better-quality buildings, lower risk of distressed or undercapitalized assets, and more stable, tax-paying properties across the city. That’s a win for owners, lenders, the City of Philadelphia, and all residents.

The Philadelphia Energy Authority, Counterpointe Sustainable Real Estate, and Pearl Properties reached agreement on Pennsylvania’s largest Commercial Property Assessed Clean Energy (C-PACE) project. 

Pearl Properties has received $60 million in C-PACE financing for construction of Harper Square, a 362,000-square-foot multifamily tower overlooking Rittenhouse Square. Once constructed, the 500-foot-tall, 45-story skyscraper will stand as the city’s tallest apartment building. 

The deal will fund multiple energy efficiency measures, including energy-recovery systems and a building automation system. Overall, Harper Square will use 36-percent less energy than required by the City’s building energy code.

“The historic size of the Harper Square deal signals a new level of market confidence in C-PACE,” said PEA Director of Commercial Programs Lisa Shulock. “Commercial real estate developers and institutional investors now recognize C-PACE as a stable, scalable financing mechanism that complements traditional capital stacks, all while advancing energy efficiency and sustainability goals.”

C-PACE is providing more than one third of the luxury building’s $173 million in construction funds. Investment management firm Barings financed the remaining $113 million.

“Pearl Properties has been proud to shape the fabric of Center City through luxury developments that stand the test of time,” said Jim Pearlstein, President of Pearl Properties.

“This project is not only a milestone for our company but a landmark for the city — a new icon that reflects the strength and vitality of Philadelphia’s Rittenhouse Square community,” added Reed Slogoff, Pearl Properties Principal.

“Successful closing of Harper Square reflects strong collaboration between CounterpointeSRE, Barings, the Philadelphia Energy Authority, and Pearl Properties,” said Eric Alini, CEO of CounterpointeSRE. “By providing full-stack C-PACE and mortgage financing, CounterpointeSRE and Barings streamlined the underwriting process, reduced the weighted cost of capital, and accelerated the project’s funding timeline.” 

Managed by PEA, the Philadelphia C-PACE program provides commercial, industrial and multifamily property owners and developers access to long-term, fixed-rate financing for energy efficiency, renewable energy, water conservation, indoor air quality, and resiliency projects. 

Interested in learning more about C-PACE? Contact us at cpace@philaenergy.org or join the next C-PACE Open Meeting on December 11. Register here.

Written by Scott Doig, PEA Summer 2024 Intern and Senior at Oberlin College

The Philadelphia C-PACE (Commercial Property Assessed Clean Energy) program requires that new construction and gut rehab projects exceed the minimum energy efficiency code requirements established by Philadelphia’s building energy code. The current code is International Energy Conservation Code (IECC) 2018. Beginning in July 2025, Philadelphia and Pennsylvania will adopt IECC 2021.

This post provides a description of the major differences between IECC 2018 and IECC 2021 for commercial properties.

A recent analysis by the Pacific Northwest National Laboratory (PNNL) indicated that commercial buildings adhering to the IECC 2021 could see energy savings of 4.7 percent compared to IECC 2018. 

Key Changes in the IECC 2021 for Commercial Buildings

Building Envelope: The new code mandates higher insulation levels to improve thermal resistance (R factor) and reduce heat transfer (U factor). The updated code requirements for envelope air leakage testing and verification adopted by Pennsylvania requires that the reports be submitted to code officials. Additionally, new provisions mandate controls for operable openings including windows and doors. 

Mechanical Systems: The code updates efficiency requirements for mechanical equipment. These include refinements in energy recovery ventilation and introducing a new fan efficiency metric.

Electrical Power and Lighting Systems: The code increases lighting and power efficiency requirements. Pennsylvania made section 405.11 on automatic receptacle control optional. There are also new provisions that mandate energy metering and monitoring.

Efficiency Requirements of Section C406: The revised structure of Section C406 now includes a greater number of additional efficiency options. Buildings must comply with one or more of the following: enhanced HVAC performance requirements, reduced lighting power, improved lighting controls, on-site renewable energy supply, dedicated outdoor air systems for certain HVAC equipment, high-efficiency service water heating systems (hot water for restrooms, showers, kitchens, etc.), enhanced envelope performance, and measures to reduce air infiltration.

Appendices: New appendices are included in IECC 2021 though they were not adopted for use in Pennsylvania, so are optional. They include: (1) Appendix CA Board of Appeals to address disputes related to code interpretation and enforcement; (2) Appendix CB is for Solar-Ready new construction; (3) Appendix CC introduces provisions for zero energy commercial buildings.

Resources:

IECC 2021 Summary

PNNL Analysis of IECC 2021 Energy Savings

IECC 2021 Commercial Code (Chapter 4)

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C-PACE was used to finance the construction of 114-unit multifamily property in the Fishtown neighborhood near the Market-Frankford “El” expanding on the number of transit-oriented developments in the area. On July 31, 2024, PACE Loan Group (PLG) closed a $10.6 million C-PACE loan with 1440 FRONT LLC to complete the capital stack for the new construction of a 114-unit multifamily property in the Fishtown neighborhood of Philadelphia resulting from combining six vacant city lots. The project, at 1440 N. Front Street has an expected completion date of June 2026. 

The new construction project includes 2,083 sq. ft. of ground-level retail space, 114 apartments, a green roof deck, fitness center, and business center. Builders Capital provided a $14 million construction loan. The C-PACE proceeds will be used for the building envelope, energy-star windows, HVAC, lighting systems, and mechanical systems. 

Fact sheets for this project and all PA C-PACE projects can be found here.  

Matthew McCormack (Senior Vice President) at PLG who originated the loan stated, “when a local bank backed out at the closing table, PLG worked with JLL to bring a partner lender, Builders Capital, to complete the capital stack. We were pleased that C-PACE enabled this project to move forward and to have completed our first Pennsylvania project.”

Interested in learning more about C-PACE? Contact us at cpace@philaenergy.org and/or attend our C-PACE Open Meetings which take place on the last Thursday of each month from 2:00-3:00PM. See all C-PACE Philadelphia events here.

About PACE Loan Group
PACE Loan Group (PLG) is a national leader in the C-PACE marketplace, providing direct C-PACE financing to commercial property owners. PLG benefits from institutional support with $700 million in capital from funds managed by AB CarVal, a subsidiary of Alliance Bernstein. The PLG team provides expertise up and down the capital stack, from origination and underwriting to loan servicing. To learn more about PLG, visit www.paceloangroup.com.

Philadelphia C-PACE released its 4th annual C-PACE Year in Review. The program reached $200 million in closed deals at the end of 2023, doubling the total dollar volume of deals closed in just one year. Additional highlights from the report include:

• All six projects that closed in Philadelphia in 2023 were 100% multifamily or mixed use including multifamily, demonstrating the importance of C-PACE expansion in 2022 which added multifamily properties as an eligible building type
• C-PACE projects are outpacing energy code, using between 19% and 45% less energy than a code-built building
• As Nuveen Green Capital continued to originate the majority of Philadelphia projects, PACE Equity and Northbridge ESG closed their first C-PACE deals in Philadelphia.  PEA is looking forward to repeat deals from these C-PACE lenders and encourages other C-PACE capital providers to expand into Philadelphia

Read the full report here.