Immediate Debt Service Relief

Real Estate sponsors are seeking solutions for properties that are temporarily underperforming as a result of COVID-19. Most sponsors and lenders agree that time is the most important ingredient in weathering the economic fallout from the pandemic.

Retroactive C-PACE is a powerful, flexible solution that can save sponsors 25% to 60% or more in near-term debt service costs. Retroactive C-PACE can provide immediate relief, as well as the time needed to get past the COVID-19 crisis.

TEC Partners can help sponsors understand their options and source valuable solutions from top C-PACE providers.

Immediate Savings Through Capitalized Interest

Since Retroactive C-PACE capitalizes its own interest payments for up to two years, a partial loan repayment with C-PACE can immediately reduce near-term debt service on a property by 25-35%.

A property with a $15M senior loan can save over 30% on annual debt service payments over the capitalized interest period if restructured with $5.6M of C-PACE financing

A Golden Olive Branch

Retroactive C-PACE allows borrowers to offer something of value when engaging with their lenders. Reducing lender exposure and replenishing reserves may help sponsors secure concessions such as the extension of an additional interest-only period on a loan with a significantly lower principal balance.

Two years of interest-only senior loan payments for the property in the above example would increase the total savings from 30% to 57%*
Over a 24-month period, this amounts to over $1M in debt service savings*

Extending the Runway with Flexible Capital

C-PACE can delay its own debt service payments until well outside of most predictions of the COVID-induced economic stress window.

The first interest-only payment for C-PACE financing taken out today may be as far away as Q1 of 2023
With interest-only periods of up to five years on retroactive financing, amortizing payments may begin as late as Q1 of 2026
C-PACE principal never comes due as a balloon payment due for any reason, including capital events, or even default
C-PACE financing can be prepaid at any time – typically sponsors will repay C-PACE when the property qualifies for less expensive stabilized Agency or HUD financing
If not prepaid, C-PACE self-amortizes over a 20-25 year term

To learn more about C-PACE, prequalify your property, and discuss your provider and financing options, contact TEC Partners today.

* Assumes a $15M in-place senior loan with a 4.00% rate amortizing on a 25-year schedule, paid down with $5.6M of C-PACE financing.