As the commercial real estate (CRE) industry faces mounting pressure to reduce utility costs and meet building performance standards (BPS) and decarbonization goals, the need for innovative financing solutions has never been greater. Cities like New York, Boston, and Seattle are implementing stringent regulations—such as New York City’s Local Law 97 (LL97), which imposes penalties of $268 per metric ton of CO2e for non-compliance—while a $2.5 trillion CRE loan maturity wall looms by 2025. These challenges highlight a critical gap: traditional financing often fails to address the unique needs of energy efficiency and resilience projects. 

At Sustainable Credit Partners (SCP), our first mortgage product offers a streamlined, integrated approach that reduces barriers and empowers property owners to achieve compliance and enhance asset value. 

Understanding the landscape of financial solutions is important. The Department of Energy’s Better Buildings Financing Navigator outlines a variety of funding streams for energy efficiency and resilience projects. Each with strengths tailored to specific needs, here are our key takeaways for the solutions most relevant for CRE:

• Utility Subsidies + Incentives are ratepayer-funded programs that reduce upfront costs for specific upgrades like HVAC or lighting systems. While valuable for building owners with limited capital, they typically cover only 10-30% of project costs and require separate financing for remaining expenses. Programs often have limited annual budgets, lengthy approval processes, and require coordination with utility administrators.

• Mission-focused Financing such as Green Banks provide favorable terms like lower interest rates and longer payback periods for clean energy projects. While some can finance whole properties, their availability varies by region and they often have scale limitations or complex application processes that can be barriers for mid-market CRE owners. 

• Private Loans take various forms, including programs such as Commercial Property-Assessed Clean Energy (CPACE), which ties financing to the property. CPACE provides project-specific financing for efficiency and renewable energy improvements, with repayment through property tax assessments over 10-20 years. However, CPACE loans are additional financing that sits alongside existing mortgages, requiring mortgage holder consent and involving property tax complexities. While effective for dedicated retrofit projects, CPACE requires managing multiple financing relationships and cannot address broader refinancing needs. Private lending solutions like SCP offer an alternative approach by integrating efficiency financing directly into primary mortgages, streamlining the process for property owners.

  
  

While there are multiple pathways for building efficiency project financing, solutions often involve fragmented processes, eligibility constraints, or specialized applications that can overwhelm property owners.

SCP’s First Mortgage: A Holistic, Streamlined Solution

SCP’s first mortgage product redefines energy efficiency financing by recognizing the importance of efficiency projects and enabling the integration of efficiency and resilience projects into the first mortgage or primary financing of a property.

Here are the four main differentiators that highlight the SCP advantage:

1. Integrated Financing for Efficiency and Resilience

   
   

   Unlike utility incentives or C-PACE programs, which focus on specific upgrades, SCP's first mortgage finances both the property acquisition or refinance and the associated efficiency and resilience improvements with dedicated proceeds for sustainability projects. This holistic approach allows owners to complete sustainable upgrades such as retrofitting HVAC systems, upgrading insulation, or lighting upgrades, without seeking multiple funding sources. SCP loans are sized to reflect the increased property value resulting from reduced operating expenses and enhanced performance. For example, a property owner upgrading to comply with LL97 could finance energy-efficient chillers and stormwater management systems within the same mortgage, simplifying the process and reducing administrative burden. Additionally, SCP loans can complement utility rebate programs, reducing the time and effort required to secure funding and making it easier for owners to act quickly in response to regulatory deadlines or market opportunities. 

   
   

   These economics work even in markets without strict performance standards. For example, technical partner GreenGen managed a $617,000 LED lighting retrofit for a 300,000 square foot parking garage. The project achieved 71% energy savings and $114,914 in annual cost savings, representing a 20% ROI and demonstrating how efficiency improvements can drive significant value creation even without regulatory compliance drivers. By offering a comprehensive solution, SCP eliminates the need to navigate multiple programs, each with its own eligibility criteria and application processes.

   
   

2. Embedded Technical Assistance

   
   

   Both compliance-driven and purely financially motivated projects can be daunting, especially for mid-market property owners with limited technical resources. Unlike PPAs or ESAs, which outsource project management to third parties, SCP offers technical assistance to support borrowers by reviewing planned efficiency upgrades, assessing regulatory risks (e.g., LL97 penalties), and optimizing projects to identify areas for additional energy savings and resilience improvements. This hands-on support reduces risk for both SCP and borrowers and is scalable across different geographies and building types.

   
   

3. Enhancing Asset Value with Efficiency Investments

   As highlighted at the IMN ESG & Decarbonizing Real Estate Forum, simple payback periods often fail to capture the full financial value of efficiency investments, such as increased asset value at sale. SCP's first mortgage aligns with this insight by factoring in the value created by efficiency investments in addition to the long-term benefits like reduced operating costs and improved underwriting through risk planning software. Value creation from sustainability projects makes SCP loans more attractive to borrowers by recognizing and financing the tangible benefits of these improvements. For instance, at IMN, one owner shared that they secured a $200,000 seller credit by implementing building efficiency and resilience measures, demonstrating the tangible impact on property value.

   
   

Why SCP’s Approach Matters

The CRE industry is at a pivotal moment. In addition to rising utility costs, regulations like LL97, Boston’s BERDO, and Seattle’s Building Emissions Performance Standard are setting ambitious targets. Despite these ambitions, only 4% of premium office buildings are projected to meet 2030 standards without significant upgrades. Meanwhile, the looming maturity wall demands creative refinancing solutions across the CRE market. SCP’s first mortgage product addresses these challenges by providing a flexible, integrated, and supportive financing model that empowers property owners to achieve compliance, enhance resilience, and unlock financial value.

By integrating efficiency and resilience into the first mortgage, SCP not only reduces barriers but also positions properties for long-term success. Whether you’re retrofitting to reduce utility costs, improve occupant comfort, meet BPS requirements, or preparing for a refinance, SCP’s solution offers the simplicity and flexibility to help you achieve your project goals. 

Ready to future-proof your asset? Contact us! www.scpcre.com