C-PACE and ground-lease capital: a primer for sponsors

Two structures that sat at the edge of the capital stack five years ago are now regular parts of it. Both lower a project's blended cost of capital. Both work differently from a conventional loan, and both reward sponsors who understand them before they are needed.

C-PACE in one paragraph

Commercial Property Assessed Clean Energy financing is long-term, fixed-rate capital for energy, water and resiliency improvements. It is repaid through an assessment on the property tax bill and stays with the property on a sale. Because it is secured by the assessment, it can be priced below mezzanine debt or preferred equity, and in many states it can be applied to work completed in the recent past.

The market has scaled

PACENation reported a record $2.42 billion of originations across 214 transactions in 2024, and a further record of about $3.7 billion in 2025, an increase of roughly 53%. Cumulative volume has passed $10 billion. Forty states and Washington, D.C. have enabling legislation, and 32 programs are active, up from six in 2015.

Transaction size has grown with it. In January 2026, a $465 million C-PACE financing closed on an office-to-residential conversion in Washington, D.C., the largest on record. Rules are widening as well: Florida has removed look-back limits on retroactive financing, and New York City now accepts gut rehabilitations.

Where C-PACE fits

• New construction and conversions, where eligible building systems are a meaningful share of cost.
• Recapitalizations, where recently completed improvements can be financed retroactively to reduce a more expensive layer.
• Any stack with a gap between senior proceeds and equity that would otherwise be filled at a higher rate.

The practical requirement is senior lender consent. That conversation is far easier when one platform is arranging both pieces.

Ground lease capital

In a ground lease, the land is separated from the building. An investor owns the land and leases it to the sponsor for a long term, and the sponsor finances the building with a leasehold loan. The land is paid for with low-cost, long-duration capital, which reduces the equity the sponsor needs.

The trade-offs are real. Rent escalations, the lease term remaining at exit and leasehold lender protections all need to be negotiated with the eventual sale and refinancing in mind.

How we use both

HWG Private Credit provides ground lease loans with an attached senior, and C-PACE capital alongside B-notes. We structure them as part of one capital stack, underwritten by one team, so that each piece is sized against the others and the documents work together at closing.

This article is for general information only. It is not investment, legal or tax advice, and it is not an offer to lend, an offer to sell or a solicitation to buy any security. Past transactions and past performance are not indicative of future results.