- Ares Management is committing up to $300M to Clearwater PACE for C-PACE commercial property loans.
- Clearwater will finance energy-efficiency upgrades across 40 states, targeting checks of $40M–$50M.
- The capital supports improvements in HVAC, water conservation, and renewable energy systems.
- Private lenders like Clearwater are gaining traction as higher rates push borrowers away from banks.
New Capital for Energy Upgrades
Ares Management has committed up to $300M to Clearwater PACE to fund energy-efficiency projects through C-PACE programs in commercial properties, reports The WSJ. Clearwater, part of AXCS Capital, will use the fresh capital to help property owners finance upgrades such as HVAC, water systems, and lighting improvements.
These programs leverage a tax-assessment structure, creating long-duration, senior-secured instruments that reduce risk and lower capital costs for borrowers. The Ares-backed vehicle targets $40M–$50M loan checks with a planned deployment by the end of this year and an average loan-to-value ratio near 35%.
Why It Matters
Energy upgrades are increasingly important in commercial real estate, driven by state-backed C-PACE programs. Owners can finance improvements for commercial, mixed-use, and multifamily properties, repaying the costs via a property tax assessment. The model is gaining favor as traditional banking becomes less accessible due to prolonged high interest rates.
Clearwater operates across the US but is especially focused on California and Florida, regions with extensive opportunities for energy improvements. The company’s ability to offer long-term, fixed-rate capital aims to fill the gap left by banks and appeal to property owners looking to upgrade assets efficiently.
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Market Context
Private nonbank lenders like Clearwater are taking on a larger role in CRE financing. Market volatility and regulatory caution continue to limit traditional bank lending. As a result, private credit is gaining ground among property owners. Moody’s Ratings recently highlighted the risks while emphasizing this growing shift. At the same time, Ares Management continues to expand in asset-based finance and real estate credit. That push also reflects its broader move into large-scale real estate platforms and partnerships, as the firm looks to deepen its footprint across property sectors. The firm collected $572M in CRE loan repayments last year, reinforcing that strategy.
What’s Next
Clearwater’s goal is to fully deploy the Ares funding by year-end, supporting a pipeline of energy-focused improvements nationwide. With C-PACE financing seen as a public benefit and more borrowers seeking alternatives to banks, energy upgrades are expected to represent a growing share of the CRE lending market.
