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Capital Stack Options: C-PACE, OZ, & EB-5 for Hospitality Builds in Puerto Rico

If you're planning a hotel or resort build in Puerto Rico, understanding your capital stack is critical.


At DEV Builders Group, we guide clients through every layer, from C-PACE audits to pre-construction modeling and incentive alignment. Puerto Rico is emerging as a prime destination for hospitality development thanks to demand growth and layered financing tools.


In 2025, hotel developers and investors are turning to capital stack strategies that incorporate C-PACE, Opportunity Zones (OZ), and EB-5 financing. These structures reduce risk, increase return potential, and align with Puerto Rico’s economic incentives and sustainability goals.

What Is a Hospitality Capital Stack?


A capital stack refers to the layered structure of financing used in hotel development. It typically includes:



  • Senior debt (bank loans)

  • Mezzanine debt (subordinated financing)

  • Preferred equity

  • Common equity

  • Specialty layers like C-PACE, OZ equity, or EB-5 capital

In Puerto Rico, developers can combine these tools with Act 60 tax incentives to optimize ROI, reduce upfront capital needs, and create sustainable, high-yield hospitality assets.

C-PACE Financing for Hospitality Projects


C-PACE (Commercial Property Assessed Clean Energy) allows developers to finance energy-efficient upgrades through a property tax assessment.


It offers fixed-rate, long-term, non-recourse funding that doesn’t interfere with senior debt.


Benefits for Hotel Builds


  • Up to 100% financing for energy-efficiency, water conservation, and resiliency

  • Terms up to 30 years

  • No upfront equity needed for green retrofits or upgrades

  • Boosts NOI through utility savings

Real Example


The Hilton Garden Inn in Denver, CO used $3.1M in C-PACE to fund HVAC, LED, and building envelope upgrades.

The improvements reduced operating costs and supported LEED certification [7].


In Puerto Rico, C-PACE financing is currently being developed in partnership with energy and infrastructure entities and is expected to become applicable for commercial hospitality projects in major metro areas such as San Juan and Dorado as adoption increases [6].

Opportunity Zones (OZ) for Hotel Development


Puerto Rico has 98% of its land designated as Opportunity Zones, making it one of the most OZ-advantaged markets in the U.S.


Qualified Opportunity Funds (QOFs) invest in these areas, offering major tax advantages.


OZ Tax Benefits for Hotels



  • Capital gains deferral through 2026

  • No tax on new gains after a 10-year hold

  • Step-up in basis on original investment


Ideal Uses


  • Ground-up construction in underdeveloped areas

  • Renovation of existing hospitality properties

Real Example


An OZ hotel in Palm Beach, FL used OZ equity with conventional debt to develop a boutique resort [1].


Puerto Rico’s eligible OZ areas include municipalities like San Juan, Ponce, Bayamón, and Mayagüez, making these regions strong candidates for OZ-aligned hotel developments [9].


Explore our hospitality construction expertise →



EB-5 Capital for Puerto Rico Hospitality Projects

EB-5 allows foreign investors to gain U.S. residency by funding job-creating projects.


In hotel projects, EB-5 typically fills a portion of the equity layer.


Benefits



  • Long-term, low-cost capital

  • Often structured as mezzanine or preferred equity

  • Reduces need for costly institutional equity


EB-5 Criteria


  • Minimum investment: $800,000 (TEA-qualified area)

  • 10+ U.S. jobs must be created per investor

  • Requires USCIS approval through a regional center

Real Example


EB5 United funded a 5-star resort in California, using EB-5 equity with OZ and senior debt [3].


Puerto Rico’s high-unemployment municipalities qualify as Targeted Employment Areas (TEAs), enabling EB-5 use for hospitality development in places such as Arecibo, Aguadilla, and parts of Ponce [2].



Combining C-PACE, OZ, and EB-5: A Strategic Capital Stack


Puerto Rico developers are combining these financing tools to reduce equity requirements and increase capital flexibility.


Example Capital Stack



  • Senior loan – 50%

  • EB-5 capital – 20%

  • OZ equity – 20%

  • C-PACE financing – 10%

This multi-layered structure enhances leverage, reduces cost of capital, and maximizes tax advantages.

Puerto Rico’s Capital-Friendly Advantage


Puerto Rico’s hospitality investment climate includes:


  • 4% fixed corporate tax rate

  • 100% property tax exemption (Act 60)

  • OZ tax breaks

  • C-PACE green financing (in development)

These benefits make Puerto Rico one of the most capital-stack-friendly destinations for hotel development in the U.S.

What Developers Need to Know


To access these tools, you’ll need to:


  • Partner with a USCIS-certified regional center (EB-5)

  • Create a compliant OZ business plan

  • Work with a C-PACE provider to conduct energy audits

  • Align construction timelines with Act 60 incentives and permitting requirements

DEV Builders Group offers full support through each step. From pre-construction to capital planning, we ensure your project aligns with local incentives and financing layers.

FAQ: Capital Stack Options

for Hospitality in Puerto Rico

  • What is a capital stack in hotel development?

    It’s the combination of financing layers—debt, equity, mezzanine, and specialty capital—used to fund a hospitality project.

  • Can C-PACE financing be used in Puerto Rico?

    Yes, but as of 2025, availability is limited and concentrated around energy efficiency-focused developments in regions like San Juan and Dorado.

  • What are the benefits of using Opportunity Zones?

    OZs allow for tax deferral, step-up in basis, and exemption on gains after a 10-year hold.

  • How does EB-5 funding work for hotels?

    Foreign investors contribute capital in exchange for residency. EB-5 is usually used as mezzanine or preferred equity.

  • Can I combine C-PACE, OZ, and EB-5 in one project?

    Yes. Stacking these can reduce equity requirements, improve ROI, and attract different investor classes.

  • Where can I get help structuring my capital stack in Puerto Rico?

    Contact DEV Builders Group to align your project with tax incentives, permit timelines, and financing strategies.

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A Strategic Location with Unmatched Tax Incentives

WHY PUERTO RICO IS A STRATEGIC LOCATION

Puerto Rico is more than a destination—it’s a growth opportunity.


Tax Incentives


Acts 60, 20, and 22 offer major tax benefits for hospitality and commercial projects.


U.S. Legal Framework


Operate under U.S. law and banking systems while tapping into Caribbean and Latin American markets.


Tourism Growth


Year-round tourist activity drives demand for accommodations and entertainment.


Skilled Workforce


Strong local talent allows for quality construction without costly outsourcing.


Infrastructure Investment


Continuous improvements in roads, power, and internet connectivity.


Opportunity Zones


Access to federal tax incentives for qualified properties.

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CONTACT US

READY TO BUILD A DESTINATION THAT PERFORMS?

Contact DEV Builders Group to discuss your hotel, restaurant, or venue project. We’re ready to build your vision with care, speed, and excellence.

Our Office

Calle Aldebaran | 00920 San Juan | Puerto Rico

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Frequently Asked Questions

  • What tax incentives support hospitality developments in Puerto Rico?

    Puerto Rico’s Tourism Development Act (Act 74) provides strong incentives: up to 90 % exemptions on property, municipal, income, and construction taxes for hotels, casinos, and entertainment facilities.


    How DEV Builders helps: DEV Builders Group guides investors through incentives, handling zoning, tax-decree applications, and build-ready compliance.

  • How stable is demand for hotels and entertainment venues on the island?

    Tourism is rebounding: 5.1 million arrivals in 2022 with over $8.9 billion in revenue, a 39% increase from 2019. New mixed-use destinations like Distrito T‑Mobile continue to attract foot traffic.


    How DEV Builders Group helps: We optimize design and delivery around high-demand routes. Our Puerto Rico-native team captures local tourism patterns for greater project alignment.


  • How does Puerto Rico handle energy resilience and climate risk for hospitality builds?

    The island’s grid is prone to power outages, and new builds must consider hurricane risk and coastal flooding.


    How DEV Builders Group helps: We integrate resilient design—backup generators, hurricane-grade materials, elevated foundations, and mangrove-friendly drainage—all meeting local code and insurance requirements.


  • What financing options exist for hospitality projects in Puerto Rico?

    Qualified Opportunity Zones (OZs) cover 95 % of Puerto Rico, and Act 60 provides tax breaks for hotel investments. Investors can access C-PACE programs and explore EB‑5 visa capital tied to hotel development.


    How DEV Builders helps: We walk investors through OZ and EB‑5 planning, drafts feasibility builds, and collaborate with financing experts, helping you structure projects for both performance and compliance.