Single $103 Million AAA-Rated Note Goes to C-PACE
This is the industry’s first and largest securitization backed exclusively by commercial property-assessed clean energy/C-PACE and was issued for 82 US properties (pursuant to rule 144A of the Securities Act of 1933).
SAN FRANCISCO—The industry’s first securitization backed exclusively by commercial property-assessed clean energy/C-PACE was issued for 82 US properties (pursuant to rule 144A under the Securities Act of 1933). This is the largest and highest-rated C-PACE securitization of any kind.
The securities are backed by $115 million of C-PACE assessments on the properties in six states on the West Coast, East Coast and in the Midwest. The properties include the 17-story Statehouse Square office building in Harford, CT; The River, a shopping center in the Coachella Valley; the historic 510,000-square-foot Butler Bros. building which was revitalized into a Marriott hotel and apartments in Dallas, a three-story 80,000-square-foot office building and parking structure in Glendale, CA; the 45,000-square-foot mixed-use property, 644 Broadway in San Francisco; and the historic Camelot Theatres in Palm Springs, CA.
A single $103 million AAA-rated note was issued in connection with the transaction recently closed by CleanFund Commercial PACE Capital Inc. Credit Suisse served as the exclusive advisor and structuring agent for the transaction.
“CleanFund has demonstrated its vision to help reduce the environmental impact of commercial properties through structured finance,” said Greg Saunders, CleanFund CEO. “Tapping the public markets should open the door for follow-on transactions that bring more investors to our industry and provide our customers even more competitive and robust financing options for office, retail, industrial, multifamily and other commercial property.”
Saunders says the securitization deal should provide more competitive financing options for energy, solar, water and seismic improvements on a variety of product types.
“We’re pleased to be the first with a successful 144A financing, capping a long-held goal and fulfilling our vision to help reduce the environmental impact of commercial properties with energy improvements, solar installations, water conservation measures and so much more. Commercial property owners are beginning to recognize the superior advantages of C-PACE for upgrading the electrical, mechanical, plumbing and structural/seismic components of their buildings to reduce costs,” Saunders tells GlobeSt.com. “Our CleanFund securitization of C-PACE bonds validates the growing popularity of this unique financing tool. It’s good for the C-PACE industry, and good for property owners wanting to access Wall Street’s low cost of capital.”
Since its founding in 2009, CleanFund has built its capabilities for the C-PACE capital markets. It structured the first privately financed commercial PACE transaction in 2011, then executed the first unrated C-PACE securitization in 2014, followed by the aforementioned first 144A C-PACE securitization.
C-PACE financing was introduced in California in 2008 as a form of voluntary parcel tax assessment financing to fund qualifying improvements that reduce energy and water usage, and that provide seismic and other resiliency benefits to the built environment. C-PACE financing for commercial real estate, which has been adopted in 34 states and the District of Columbia, allows property owners to repay qualified investments for building upgrades and new construction as a line item on the property’s ordinary property tax bills. Unlike residential PACE financing on single-family homes, mortgage lenders on prospective C-PACE properties provide approval of each transaction.