The PACE

Financing Guide
All your PACE questions, answered.

1
 What is PACE?
PACE stands for Property Assessed Clean Energy—it’s a state-
based financing program that offers upfront funding for energy
efficiency, renewable energy and water conservation components of
real estate development projects. PACE is a great fit for gut rehabs,
new construction and retrofit projects. In many cases, it can be used
retroactively on projects that have already started or completed
construction. The program works well with projects of all kinds and Conventional CRE New CRE Capital
Capital Stack Stack with PACE
is increasing in popularity because of its numerous benefits:
Cap Type & Rate Cap Type & Rate

Cap % Cap %

• Long-term, fixed-rate financing 70% 65%

• Requires no out-of-pocket costs
• Increases energy savings Debt Debt
5% rate 5% rate

• Works with other incentives

• Creates positive environmental impact
20%
• Covers hard and soft energy costs 10% Mezz PACE
6.5% rate
• Non-recourse after construction
12% rate

20%
Equity 15% Equity
15% rate
15% rate

Blended Rate Blended Rate

7.7% 6.8%

The alternative to expensive debt.

Unlike mezzanine debt or preferred equity, a PACE loan offers a low,
fixed-interest rate. Plus, PACE is attached to the property, regardless
of who the owner is, and is collected as a special assessment in the
same manner as property taxes. The annual energy savings for a PACE
project usually exceed the annual assessment payment, so property
owners are cash flow positive immediately.

K EY TAKEAWAY

PACE replaces equity or mezzanine debt with

cheaper long-term, fixed-rate financing repaid as a
special assessment on the property.
Read on to find out why PACE is right for you.

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Is PACE right for my
project?
If you have a gap in your capital stack, or are using expensive,
preferred equity or mezzanine debt—the answer is likely yes!

Geography
More than thirty-five states and the District of Columbia have
adopted commercial PACE legislation. While some states are still
working on their programming, more than twenty states have
active PACE programs where projects have been funded.

wa
nh
vt me
mt nd

or mn
id ny ma
sd wi
wy mi ri
ia pa ct
ne nj
nv oh
in de
ut il
CO wv dc
ca
va
ks mo ky md
nc
tn
az ok
nm ar sc

al ga
ms

tx la

fl
ak

hi
A D O PT I O N O F CO MMERCI A L
PA CE L EG I S L AT I O N

Active
In Development
PACE Enabled
No program

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 Industry
From apartments and hotels to malls and retail, almost all commercial
buildings are eligible for PACE financing.

• Office • Multi-Family
• Residential • Agricultural
• Hotel • Retail
• Industrial • Specialty

Efficiency
Energy efficiency, energy generation improvements and, in some
states, water conservation, hurricane and earthquake resistance
measures all qualify for PACE financing.

• Lighting • Insulation
• Roof • Water Pumps
• Motors • HVAC
• Solar Panels • Low-Flow Plumbing
• Sensors • Windows

K EY TAKEAWAY

If your property falls under the categories listed

in this section­, odds are PACE is right for you.
Now, we’ll show you how the process works.

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 How does PACE work?
While PACE programs vary state by state, generally the process can
be broken down into these four steps.
1 2
TERM SHEET UNDERWRITING
APPROVAL
1. TERM SHEET
At Twain, we can provide funding, obtain senior lender
consent and guide you through the PACE process.
We’ll look at your project’s details—location, property
appraisal and construction budget—to determine the
approximate amount you qualify for. Typically, PACE
can cover about 20% of your project’s construction
cost, plus administration fees.
2. UNDERWRITING APPROVAL
Before you can receive funding, you’ll need to be
approved by your local PACE program. Twain will help
you work with an energy auditor, typically from a third-
party engineering firm, to identify measures within your
existing budget that justify the amount of funding
you’re seeking.
K EY TAKEAWAY
While variables change from program to program,
Twain has the experience and knowledge to make
securing funding easy.
Ready to get started?
314.300.4135
3 4
FUNDING REPAYMENT
3. FUNDING
Depending on what state you’re in, the approval
process usually averages 30-60 days. Once you’ve
received the okay from the administrator, you can close
on PACE and get to work! PACE typically closes at the
same time as remainder of construction capital stack.
PACE proceeds will be disbursed as the cost of the
improvements are incurred.
4. REPAYMENT
As a non-recourse loan after construction, PACE
financing is tied to the property, not the individual.
The loan is paid back through a special assessment
collected with property taxes, and the energy savings
typically cover the cost of the loan. Some industries
are eligible for additional ways to generate repayment
funding. Hotel owners can pass the cost to guests in
a tax on their bill, and triple-net leases can pass it to
commercial tenants if they wish.
5
 How do I get started?
As outlined on the last page, the first step to securing funding is working
with the right lender­—one that can help you navigate your state’s
unique PACE requirements and ensure your project reaches its full
potential.

At Twain Financial, we start with yes.

Yes, we can help you fund your next project. We’ll work with you
every step of the way—from our first conversation to closing day and
beyond—to ensure the PACE process runs smoothly, and you receive
the capital you need.

As a leading PACE lender, we have a vast network of energy contractors

and extensive experience partnering with program administrators,
property owners and developers to provide millions in funding.

Project Highlights

$6.25 M $6 M $10 M
Kemper Arena Hyatt Hollywood Greyhouse Lofts
Kansas City, MO Los Angeles, CA Oakland, CA

Learn more about our financing

parameters on the next page.

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 We can secure the
financing you need.
We can help you replace more expensive mezzanine debt or third-party equity
with financing at lower rates with less out-of-pocket cost. We’ve worked with
many new construction and gut rehabilitation developers to decrease future
expenses and increase property value.

For a smooth and efficient PACE process, review our financing parameters and
underwriting requirements—if you’ve read the rest of this guide, these should
sound familiar.

ATTRIBUTE REQUIREMENTS

PACE Lien-to-Value Less than 25% of as-complete value

LTV (PACE + Debt) Less than 100% of as-complete value

DSCR at Stabalization 1.2 (1.4 for hotels)

Lien Priority On par with (or immediately junior to) property tax lien

Recourse Non-recourse after construction

Collateral Special assessment lien

Environmental No RECs (Phase I ESA waived on case-by-case basis)

Energy Savings Compliant with statutory requirement

Mortgage Lender Consent Always required

Property/Builders Risk Insurance Twain added as additional insured

Construction Completion Guarantor Required on new construction and gut rehabs

Geography Active PACE jurisdictions

Property Types Commercial, multi-family, industrial, hospitality

Project Types New construction, gut rehabs, retrofits

CO N TA CT I N FO :
Andrew Meyer Andy Weber
We’re ready to get started when
andrew.meyer@twainfinancial.com andy.weber@twainfinancial.com
you are. Get in touch and tell us 314-300-4196 314-300-4192
about your project.
Learn more about our PACE solutions at
twainfinancial.com/pace

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