The “Maturity Wall” Is Here — TX-PACE Is Part of the Solution

Across the country, commercial real estate is entering a major refinancing cycle, often referred to as the “maturity wall.” Over the next few years, trillions of dollars in loans will come due, many of which were originated in a very different interest rate environment.

For property owners, developers, and lenders in Texas, this isn’t just a market shift. It is a moment to rethink how projects are capitalized.

What’s Driving the Challenge?

Many loans coming due today were originated at interest rates in the 3-4% range. Refinancing those same assets now often means rates closer to 6-7%, paired with tighter lending standards and, in some cases, lower property valuations.

At the same time, construction and renovation costs continue to rise, putting additional pressure on both new development and existing assets. The result: a growing gap between what traditional lenders can provide and what projects actually need to move forward.

Where TX-PACE Fits In

This is where TX-PACE is proving its value, not just as a sustainability tool, but as a practical financing solution.

TX-PACE provides:

• Long-term, fixed-rate capital
• Non-recourse financing
• Repayment through a property assessment
• No interference with lender control or remedies

In today’s environment, that structure matters. TX-PACE can replace more expensive or complex layers in the capital stacks such as mezzanine debt or preferred equity, while helping projects maintain financial stability over time.

From award-winning office developments like Harwood in Dallas to transformational hospitality projects like The Herringbone Hotel in Waco, TX-PACE is helping Texas projects close capital gaps, strengthen capital stacks, and move forward with confidence.

A Tool for Both New Development and Refinancing

We’re seeing increased interest in TX-PACE across two key scenarios:

1. Recapitalizations and Refinancing
Owners facing loan maturities are using TX-PACE to:

• Lower their overall cost of capital
• Right-size leverage
• Bridge financing gaps without diluting equity

2. New Development and Redevelopment
With construction costs continuing to rise, TX-PACE helps:

• Fund energy and water efficiency improvements that have already been built into project plans
• Reduce upfront equity requirements
• Improve long-term operating performance

Growing Market Acceptance

One of the most notable shifts is how quickly lenders have become comfortable with TX-PACE. What used to require extensive education is now a more streamlined conversation. Lenders increasingly understand the structure and recognize that TX-PACE:

• Does not accelerate
• Does not circumvent their foreclosure process
• Does not disrupt their position in the capital stack

That familiarity is helping transactions move more efficiently across Texas and beyond.

Looking Ahead

The current refinancing wave is expected to continue through at least the next several years. As it unfolds, capital stacks will continue to evolve, and flexibility will be critical.

TX-PACE is well positioned to play a meaningful role in that evolution by:

• Providing stability in a higher-rate environment
• Supporting project feasibility amid rising costs
• Enabling investment in efficiency, resilience, and long-term performance

At Texas PACE Authority, we are focused on helping stakeholders navigate these changes with clarity and confidence.

About Texas PACE Authority

Texas PACE Authority (TPA) is a nonprofit organization and the leading administrator of TX-PACE programs serving more than 100 cities and counties across Texas. TPA works with local governments, property owners, and capital providers to facilitate financing for energy and water efficiency, resiliency, and distributed generation improvements in commercial properties. Through its program administration and market leadership, TPA helps ensure that high-performance building solutions are accessible, scalable, and aligned with the long-term needs of Texas communities.