Petros PACE Finance, the Austin-based lender that closed New York City's first Commercial Property Assessed Clean Energy deal in 2021, has stopped originating new loans. The company suspended term sheets for new deals in early April and is winding down its approximately $2 billion loan portfolio, according to sources familiar with the matter.
C-PACE financing allows commercial property owners to borrow against future energy savings from efficiency upgrades, with repayment obligations tied to property tax assessments. Petros emerged as a major player in this space, helping establish the market in Manhattan and other major metros.
The shutdown affects property owners seeking to fund sustainability retrofits without traditional bank debt. C-PACE deals typically finance HVAC replacements, window upgrades, insulation improvements, and renewable energy installations. For owners midway through refinancing or upgrade projects, the loss of a major lender shrinks available capital sources.
Petros' exit reflects broader strain in the C-PACE sector. Questions about underwriting standards, borrower defaults, and the tax treatment of PACE assessments have plagued the market since 2022. Property owners facing rising interest rates and elevated construction costs have become more cautious about green financing. Lenders have tightened credit boxes and pulled back commitments.
For NYC commercial real estate specifically, Petros' retreat removes a proven competitor from a market where C-PACE played a growing role in funding building decarbonization. Owners relying on Petros for ongoing projects now scramble to secure alternative financing or shift to traditional bank loans or on-balance-sheet capital.
Remaining C-PACE lenders include Ygrene Energy Fund, Renew Financial, and several regional players. However, stricter underwriting and higher rates mean less favorable terms for borrowers than 18 months ago.
Sellers and developers