Why C-PACE Is a ‘Swiss Army Knife’ for Senior Housing

Anne Hill of Bayview C-PACE on how the program unlocks value and facilitates development.

Anne Hill of Bayview C-PACE
Anne Hill

While the cohort of Americans moving into retirement continues accelerating, the senior housing supply is not keeping up, according to JLL in a recent MHN trends report. And this year, research from the National Investment Center for Senior Housing cited a massive supply-demand imbalance of 200,000 units through 2025, and over 800,000 units by 2030, adding up to a needed $400 billion in industrywide investment. Amid a slowdown in supply and tight credit markets, C-PACE financing has proven an increasingly popular tool for developers in the sector. Project sponsors for senior housing, congregate care and retirement communities are utilizing C-PACE in ways that make it the Swiss Army-Knife of flexible finance solutions.


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These innovative iterations are helping unlock value and facilitate development for developers, sponsors and for-profit owners of senior housing properties. It offers unusual flexibility and beneficial terms for qualified improvements in energy, lighting, water systems, building envelope and other resiliency components, depending on the local and state program guidelines.

Here are a few examples.

C-PACE is helping challenged and blocked senior housing to start building.

For the 131-unit Ravella at Ormond Beach, Fla., $4 million in C-PACE helped get construction underway with an attractive 25-year fixed rate and created an overall package for the project at 80 percent combined loan-to-cost.

In Colorado, a major congregate care development offering assisted living, transitional living and memory care was facing headwinds, and C-PACE provided a needed addition of $6 million to the capital stack in order to get underway. The C-PACE component for Mesa Verde, a 124-unit senior living community in Durango, helped fund primary building systems including HVAC, electrical, plumbing and roofing.

Innovative capital-stack combinations make C-PACE increasingly popular.

The Mesa Verde project had another innovative aspect: C-PACE combined with USDA financing.

The project was originally structured with a traditional construction loan and was facing challenges.

Bayview worked with the bank in facilitating a switch to USDA financing, which made the lender more comfortable with higher leverage in combination with the PACE component. The final $27 million debt included $6 million in C-PACE while the community bank provided a $20.9 million USDA-guaranteed loan. Another result: The project sponsor received much better loan terms.

Look-back options of C-PACE can refinance 3-yr-old projects.

The ability of C-PACE to be applied up to three years after project completion is another popular aspect for senior housing.

Just this month, project sponsor Build Senior Living closed on $4.3 million in C-PACE as part of a refinance strategy for its recently completed 81-unit Hampton Manor-Taylor community in Taylor, Mich. Build Senior Living, the development arm of Hampton Manor, has completed a total of 21 communities comprising 1,634 units.

For the 102-unit Varenita senior housing community in Simi Valley, Calif., $13 million in C-PACE funding was arranged a year after completion to pay down senior debt and provide cash-out to the sponsor for future projects.

What’s next for C-PACE and senior housing?

C-PACE is becoming a highly flexible tool beyond its original uses, giving senior housing sponsors more options to consider.

For example, C-PACE can take a much larger piece of the debt-stack than many project sponsors realize. Bayview recently funded a multifamily property in Los Angeles where half of the debt came from C-PACE and half from traditional construction financing, It’s most common in states where resiliency and water systems are part of C-PACE programs in addition to energy features, allowing for a higher loan-to-cost and attractive weighted-average cost of capital.

Another recent development in C-PACE is combo-financing, where the PACE lender provides both the C-PACE and construction project financing. Bayview has provided combo-financing on a number of projects.

C-PACE is becoming a mainstream financing tool in senior and multifamily housing for its attractive terms, flexibility and wide applications. With program legislation currently enabled in 39 states, C-PACE is quickly growing in popularity among real estate owners and financial institutions looking to serve them.

Anne Hill is senior vice president of Bayview Asset Management and Bayview PACEHill is a regular Viewpoint contributor. You can find her most recent article here.

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