Who's used C-PACE financing? What are the cons red flags?

[Fabiola F.]

I'm redeveloping a distressed 138-unit building into assisted living and exploring PACE financing as part of the capital stack. I'm already initiating the process with a PACE providing and awaiting a term sheet. I'm aware of the pros, but what are some of the bigger issues to beware of?

There's a lot of stories about borrowers not receiving full disclosure of the fees and repayment terms, and most of what I've read has been from residential borrowers. What are some concerns to be aware of for commercial properties?

I'm aware that PACE is senior to other debt and the lender must approve of this position. I'm also aware that the tax assessments are attached with the building and transferred from owner to owner, which could also limit the buyer pool. I'm told that PACE loans are not available on the secondary market, which seems like it could be an issue in the event of a refinance or for the next buyer.

What are some key red flags? Have you used PACE?