Retroactive Energy Efficiency Loans Offer Pandemic Lifeline for Some Businesses

Rachel Davis, Senior Vice President of Sales at Petros PACE Finance, was quoted in this Energy News Network article about how Petros has been seeing more interest in retroactive financing in 2020.

Rachel is quoted as saying, “We are seeing it where maybe the building owner had higher-cost mezzanine debt that’s started to come due…This is a natural fit if they can replace it with PACE. And we’re also seeing folks use it to modify their senior loan agreements, where they pay down some of the senior mortgage and lower their exposure.”

Read the full article here.

Petros PACE Finance Welcomes Michael Yaki as SVP and Senior Counsel – Policy and Programs

AUSTIN, Texas, November 11, 2020 /PRNewswire/ —

Petros PACE Finance, (www.petros-pace.com), the industry leader of Commercial PACE financing, announced that Michael Yaki has joined the company as Senior Vice President and Senior Counsel of Policy and Programs. In his new position, Mr. Yaki will engage in the establishment and maintenance of C-PACE programs across the country.

“Michael’s policy background plus his experience with C-PACE programs will be an extremely beneficial add to Petros, as we navigate the growth in the market,” said Mansoor Ghori, CEO and Co-founder at Petros PACE Finance. “His knowledge of the intricacies of C-PACE programs will make an immediate impact for us. We are happy to welcome him aboard.”

For years, Mr. Yaki’s law and policy expertise has driven new market creation and PACE innovation across the country. He most recently served as the primary author of the state of Washington’s C-PACE statute enacted in June 2020. As an industry thought leader, Mr. Yaki has advised legislators in both state and local governments on how to establish successful C-PACE programs. Michael received a B.A. from UC Berkeley and a J.D. from the Yale Law School and has years of public policy experience in the public and private sectors.

“I’m excited to join Petros, the industry leader within today’s C-PACE marketplace,” said Mr. Yaki. “Commercial PACE addresses critical environmental and resiliency needs, and adds value to buildings and business owners. I look forward to working with the great leadership team at Petros to drive its continued growth across the country.”

 

About Petros PACE Finance

Petros PACE Finance, LLC is the national leader in the C-PACE marketplace, dedicated solely to providing long-term C-PACE financing to commercial property owners seeking to lower energy costs, reduce their carbon footprint, and increase property values. Leadership has decades of executive-level experience in commercial lending and structured finance, with direct long-term institutional investor relationships. With billions in committed capital, Petros is able to close transactions in eligible C-PACE markets nationwide. To learn more about Petros PACE Finance, visit our website at www.petros-pace.com.

Media Contact:
Rachel Davis
832-489-2788
rachel@petrospartners.com

SOURCE Petros PACE Finance, LLC

Originally published at Cision PR Newswire

C-PACE lender Petros sees ‘substantial’ uptick in business

04 August 2020 | 17:51 ED

Commercial PACE lender Petros PACE Finance originated 30% more CPACE
volume in 1H20 than in all of 2019, according to Mansoor Ghori,
managing director.

“Based on the term sheets we’re getting, it’s not slowing down,” he said.
“We’re getting term sheets signed about every day.”

The average size of the company’s funded C-PACE lien is “substantially
greater than it was last year,” Ghori said. The average lien funded is
currently at USD 7m, compared with about USD 2.5m to USD 3m last
year, he said.

Petros currently issues private placement deals, and last month closed
on the company’s seventh deal. The lender will likely issue two more
deals this year, Ghori said.

Many borrowers want to lock in PACE financing while it’s available now
rather than wait, given the uncertainty in the markets due to the
coronavirus pandemic, Ghori said.

“We’ve seen [project leaders] that were thinking about using PACE later
in the year, and now they’re thinking ‘we don’t know what’s going to
happen later, there’s so much uncertainty, senior lending is getting
tighter and tighter. If we’ve got the cap stack together right now let’s
just go ahead and get the pace done right now,’” Ghori said.

Also there has been increased interest due to C-PACE competitors not
being able to currently fund projects, Ghori said.

There is business “coming from competitors who had worked on these
projects, taken it to the point of closing and then something happened,
where they could no longer close on that transaction,” he said. “So,
we’ve seen that [business] come to us.”

Ghori declined to give more details on which competitors are unable to
fund C-PACE projects, following the pandemic’s outbreak.

On the investment side, more investors are still being drawn to the CPACE
sector right now, Ghori said.

“Investors are still dying to get pieces of the business,” he said,
particularly with where Treasury yields are right now.

Commercial PACE tax assessments are also seen as relatively safe
assets because the payment priorities are senior to mortgages on the
properties.

Property owners that take on a C-PACE lien pay a coupon of about 6%,
or a little lower, on average across the sector, as reported.

In response to the influx of business, Petros has also increased its team
and in July hired Connor Murch as vice president of business
development based in the St. Louis office, according to a 14 July
company release.

Because the PACE sector is relatively new still, it is often difficult to
find talent with prior experience in the market, Ghori said. However,
Murch previously worked at Stonehill PACE, where he led national
origination efforts for the firm, according to the release. “He has been
on board now for two or three weeks and we’ve already got four deals
that we’re working on, that he brought in,” Ghori said.

by Larissa Padden

Originally published at Debtwire

Petros PACE Finance Expands Legal Team with Hiring of John Gamm and Katy Crocker as Vice Presidents of Legal

AUSTIN, Texas, July 21, 2020 /PRNewswire/ — Petros PACE Finance, (petros-pace.com), the industry leader of Commercial PACE financing, announced today the hiring of John Gamm and Katy Crocker as Vice Presidents of Legal, strengthening the legal team as the company continues to grow nationally.

“These key additions to the team come at a critical time for Petros, as our business has accelerated in recent months,” said Mansoor Ghori, CEO and Co-founder at Petros PACE Finance. “The combined knowledge and experience of John and Katy will position us well for continued growth and best-in-class service, as we expand our offerings.”

Gamm joins Petros from Stinson, where he served as a transactional associate in the real estate tax credit finance group. At Stinson, he represented capital providers in connection with C-PACE transactions across various states and facilitated tax credit transactions, including historic tax credits, New Market Tax Credits, and renewable energy tax credits. Gamm received a J.D. from Creighton University School of Law and a BBA from Texas Christian University, graduating cum laude.

“Petros has built an impressive business and I’m excited to join a team that has established a leading reputation in rapidly growing practice areas serving commercial real estate owners and developers,” said Gamm.

Crocker joins Petros from Cramer Weatherbie Richardson Oliver, LLP, a law firm specializing in commercial real estate transactions.  She represented clients involved in a diverse range of commercial real estate and business transactions. Crocker has more than 15 years of experience in the real estate industry, previously working for a real estate investment group focused on international hospitality acquisitions and as a financial analyst in the Real Estate finance and Securitization Group at Credit Suisse. Crocker received a BBA from the University of San Diego and a J.D. from Texas Tech University School of Law.

“Petros is a category leader that’s helping the real estate industry move forward during these uncertain times, and I look forward to being a part of the effort to progress the firm into the next phase in its evolution,” said Crocker.

About Petros PACE Finance

Petros PACE Finance, LLC is the national leader in the C-PACE marketplace, dedicated solely to providing long-term C-PACE financing to commercial property owners seeking to lower energy costs, reduce their carbon footprint and increase property values. Leadership has decades of executive-level experience in commercial lending and structured finance, with direct long-term institutional investor relationships. With billions in committed capital, Petros is able to close transactions in eligible C-PACE markets nationwide. To learn more about Petros PACE Finance visit our website at petros-pace.com.

Media Contact:
Kylie Fitzpatrick
512-599-9042
kylie@petrospartners.com

SOURCE Petros PACE Finance, LLC

Originally published at Cision PR Newswire

Petros PACE Finance’s Growth Continues with Hiring of Industry Veteran Connor Murch as Vice President of Business Development

AUSTIN, Texas, July 14, 2020/PRNewswire/ — Petros PACE Finance, (petros-pace.com), the industry leader of Commercial PACE financing, announced today the hiring of Connor Murch as Vice President of Business Development based in the St. Louis office, strengthening the business development team as the company continues to grow nationally.

“Our business and transaction volume has increased rapidly in recent months, despite the economic downturn, and we our expanding our team to accommodate that growth,” said Mansoor Ghori, CEO and Co-founder at Petros PACE Finance. “Connor brings a wealth of industry experience to Petros and will be a valuable asset on the team as we continue to build momentum.”

Murch joins Petros from Stonehill PACE, where he led national origination efforts for the firm. Prior to that, Murch gained extensive experience closing C-PACE and other commercial real estate transactions while serving as a Senior Finance Manager at RAHILL Capital. He also held roles as a Finance Manager and Project Manager at Revival STL Construction, a commercial real estate development, investment and management firm.

“Petros is a pioneer at the forefront of the C-PACE industry,” said Murch. “I’m excited for the opportunity to be a part of the tremendous growth that Petros is currently experiencing even during these uncertain times.”

Murch received a BSBA with a concentration in Finance and Real Estate from the University of Missouri Trulaske College of Business.

About Petros PACE Finance

Petros PACE Finance, LLC is the national leader in the C-PACE marketplace, dedicated solely to providing long-term C-PACE financing to commercial property owners seeking to lower energy costs, reduce their carbon footprint and increase property values. Leadership has decades of executive-level experience in commercial lending and structured finance, with direct long-term institutional investor relationships. With billions in committed capital, Petros is able to close transactions in eligible C-PACE markets nationwide. To learn more about Petros PACE Finance visit our website at petros-pace.com.

Media Contact:
Kylie Fitzpatrick
512-599-9042
kylie@petrospartners.com

Originally published at Cision PR Newswire

PACE Financing for Commercial Real Estate with Mansoor Ghori – CREPN #249

 

Mansoor Ghori  0:00

What PACE does it allows them to look longer than one year allows them to look through, you know, 2, 3, 4 years down the road down the road, and pull all those ECM that they’re going to do over that time period into one holistic project that they can do day one, because of the fact that there’s long term financing. It should be net positive from day one.

Unknown Speaker  0:22

Welcome to C R E P N Radio for influential commercial real estate professionals who work with investors, buyers and sellers of commercial real estate coast to coast whether you’re an investor, broker, lender, property manager, attorney or accountant We are here to learn from the experts.

J Darrin Gross  0:42

Welcome to Commercial Real Estate Pro Networks CREPN Radio, Episode Number 249. Thanks for joining us. My name is J Darrin Gross. This is the podcast focused on commercial real estate investment and risk management strategies. Where we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio. Let’s get into the show. today. My guest is Mansoor Ghori.  Mansoor is the co-founder and CEO at Petros PACE Finance. And in just a minute we’re going to speak with him about PACE financing, what it is, and how it can help commercial real estate investors. But first, a quick reminder, if you like this show, CREPN radio, please let us know. You can like, share, or subscribe. And, as always, please leave a comment. We’d love to hear from our listeners. Also, if you’d like to see how handsome our guests are, be sure to check out our YouTube channel. And that’s Commercial Real Estate Pro Network on YouTube. With that, I want to welcome my guest Mansoor. Welcome to CREPN Radio.

Mansoor Ghori  1:57

Thanks, Darrin. Appreciate it.

J Darrin Gross  1:59

Alright. Well, I’m really looking forward to our chance to talk today. And, before we get started, if you could take just a minute and share with listeners a little bit about your background.

Mansoor Ghori  2:10

Sure. So, I’ve been in the in the commercial lending venture capital and structured finance world for over 30 years now. We founded our firm Petros PACE Finance in 2011, actually. And really what it is is Petros is a structured finance shop and really what we do is we create fixed income instruments that we then get rated, securitized and sold to large institutional investors. PACE is one of those products that we create and we started the PACE part of it, probably in 2013 or 2014 to really kind of get into the industry and are now the largest commercial PACE provider out there.

J Darrin Gross  3:02

Great on the PACE. I think that’s kind of the main, you know, interest as far as what led me to reach out to you. And it sounds like you’re clearly – if you’re the largest – you’re the right guy to talk to about this. For the uninitiated, can you explain what it is, just as an overview, what PACE stands for?

Mansoor Ghori  3:25

PACE stands for Property Assessed Clean Energy. And what it does is allows people like us to enable commercial property owners to either retrofit or build new properties with more energy efficient upgrades. And it allows us to do that over a period of time, which is much longer than they would get if they got a bank loan. So, we can actually do the PACE assessment financings over a period of up to 30 years or the weighted average life of whatever’s being put in. So, when you think about that from a commercial real estate owner’s perspective, historically, there has not been a lot of energy upgrades to properties because the cost benefit just never made any sense. Right? So, you know, the payback periods on a lot of these upgrades are anywhere from, you know, 10 to 20 years or maybe even longer. But the financing that they would get for it from a bank would be anywhere from three to five years. So, the project was always underwater. Now with PACE, it allows us to do this, where the project is net positive from day one, because we’re doing it over the extended period of time. And it’s much cheaper than using your own capital and a lot of these commercial property owners want to use their own capital for higher return items and commercial PACE improvements are not a higher return items, so they’d rather go out and buy new properties or, or do something else with their money. So, this is a great mechanism for them to be able to retrofit those properties and actually be net positive from day one.

J Darrin Gross  5:18

Or cash flow positive from day one for a capital improvement project. That’s, that’s unique. I mean, that’s not exactly the way the conversation usually goes. Right. So, talking about energy, is there an audit? Or how do we determine, you know, what our baseline is? Is there a need for a measurable improvement?

Mansoor Ghori  5:45

Yeah, so first of all, every deal that we do, there’s an energy audit that’s completed, whether it be a retrofit project, or whether it be a new construction gut rehab project, so that energy audit will go out there and for retrofit project we’ll look at what’s currently in there. And they will then look at what is going to be put in there. And they’ll do the analysis to figure out what the difference in savings is going to be with the new ECMs on a new construction gut rehab project that’s hard to do. People use as a baseline typically code and then they’ll look at code and look at ECM that are either above code or add code to figure out what you know the potential energy usage is going to be on those new properties. Okay, but every project does have an energy audit that’s completed.

J Darrin Gross  6:39

Got it. On the retrofits, if we start with a baseline and the projected improvement is, you know, whatever it is, is there a time period for monitoring to confirm that we’ve met that or is it just a one time we did the calcs and we’re good to go?

Mansoor Ghori  7:00

Yeah, that’s a good question. And it depends per state and per program. So, there are some programs that require that you continue to do the monitoring to make sure that savings are there. And there’s one program in particular, I think it’s the Michigan program for a, smaller transaction, so that’s typically less than $250,000. Actually, I’m sorry, if it’s greater than $250,000 dollars, and there’s an energy guarantee that the contractor has to actually give the borrower or the property owner. And what that does is it guarantees that the savings that the energy auditor actually projected are going to be there and if not, then he’s coming out of pocket to make that difference up. So, there are specific programs that make you actually monitor your results and others that don’t necessarily monitor that from a year to year basis, but you know, the borrowers are actually watching to make sure that those savings are there.

J Darrin Gross  8:07

And so, in the spectrum of energy savings, and I guess my first thought would be like heating and cooling are, you know, windows or your water? Is there a defined list of projects that are eligible?

Mansoor Ghori  8:29

So, it’s not a defined list of projects. But there are a defined list of ECMs. And once again, that changes by program and by state, for instance. In California, there’s seismic upgrades that are allowed under the PACE program. And since California is really kind of the only state that has the issues with earthquakes, that same allowance is not used in other states like Texas or Florida or whatever. But in Florida there’s hurricane resistance measures that are included in the program which are not included in other states. So, it is more program specific, but in general a lot of the similarities are things like water, things like renewable energy, whether it be solar panels wind or some other renewable energy. There’s also lighting, lighting controls, chillers, boilers, windows, windows tinting, and other energy saving upgrades. So, there’s a big list that that is similar and then for specific states, there are some differences, some nuances

J Darrin Gross  9:51

Got it. So, if I have a project that we’re gonna, you know, or that’s got elements that qualify that we can do through PACE, you mentioned kind of the weighted average as far as the length of the payback. So, if I’ve got something that’s 20 years and I’ve got something that’s maybe seven years and, and on and on, do they basically just take all those up and come up with an average and that becomes my length of the payback?

Mansoor Ghori  10:26

Exactly, so not the payback, but the length of the assessment. So, you know, we’ll figure out exactly what that length, you know, the average life is of everything being put in, and then that will be the length of the actual assessment. So, if it’s 17 years, our assessment will be on our property for 17 years. So, what that does, is it enables the net positive from day one feature of PACE. You know, the reality is if you had, you know, a 20 year, weighted average life of ECM is being put in yet you’re 10 or were 10 years, then once again, it’s the same concept of getting a three year loan for a 10 year payback type issue when you’re underwater. So now this kind of stretches it out so that whatever is being put in, you should be able to be net positive from day one because the length of the assessment is the same as what the weighted average useful life is.

J Darrin Gross  11:34

Are there like some sweet spot kind of items that you typically see? I mean, you mentioned kind of California and Florida being unique with their environmental, you know, issues that they have there but is there kind of a sweet spot of things that you typically see as a kind of lighting and water?

Mansoor Ghori  11:56

I think the majority of what we see is lighting, lighting controls, we see chillers, we see boilers, and we see kind of like window envelope type deals. We have not seen as much solar as we thought we’d see. And that’s primarily I think, because solar so far is a really nice to have, but it’s not a have to have. And these guys are looking at their ECM, they’re looking at their capital budgets over the next three to five years and saying, Okay, well, what do we actually have to change out? Right? They have to change out the HVAC because they’re going to go bad. And if it’s in a warm state, guess what happens in the summertime. You know, same thing with the boilers up in a cold region, they have to get those changed out so that they’re not freezing during, you know, the winter in Minnesota. So, look at the things that they absolutely have to change up first, and then eventually they’ll start going and looking at things that will be nice to have, as we see more mandates, like what’s happening in California right now, for solar. So recently, there was a law that was passed where all new construction of commercial buildings have to have solar on them. And those I think start taking effect, maybe 2021 and 2022. But as we see more of those mandates that are spread across the country, then I think we’ll probably start seeing more solar projects. That make sense.

J Darrin Gross  13:29

Yeah. Where did you say that was mandated for? California? Yeah. That would certainly drive the demand for, you know, more installation of solar, which, sometimes, that’s what it takes is some sort of a governmental rule like that, right. So, so let’s talk a little bit about the money. We’ve talked about the length of the payback. You introduced in your introduction there about how you raise capital and I didn’t add on, but basically the mechanism I guess for the financing for the long-term financing for this, if I have a project and I’m seeking financing for it, is do you go to the originator of the PACE program? Is it available through different mortgage brokers or how’s that?

Mansoor Ghori  14:41

Yeah, actually, you can come directly to us. So, you can come to us directly and there’s, you know, a handful of others that are more national, that we’ll be able to do deals for you but we’re the actual lender, right? So, if you come to us and there is no fee in between, you know, the commercial property owner and us where the property owner has to pay the broker typically a fee. So, if you come to us you kind of skip that routine. And we actually do the structuring the underwriting and the funding of the transaction.

J Darrin Gross  15:19

Okay. And can you also do like if it’s a new purchase, and I’ve got, you know, essentially, just for round numbers, a $1 million building and traditional financing to require that I come up with $250,000 or $20o,000 worth of down payment. Can you do the balance of the financing?

Mansoor Ghori  15:46

So, the way that it works in PACE is we’ve got limitations, so we’re typically not more than 30% or 25% of a of the market. The value of that property if there is a mortgage on the property, and we can go up to 35% if there’s no mortgage on the property, so let’s just say it’s a $10 million building. We can finance and there is a mortgage on the property we can finance up to two and a half million dollars on that property. Okay.

J Darrin Gross  16:19

Okay. And how would you tell me on the capital stack, is that now a lien against the property? Or how does that work in there?

Mansoor Ghori  16:37

Yeah, so that’s, that’s a great question because that’s kind of comes to the essence of what PACE is. So, PACE is actually considered a property tax assessment. So, when we close the transaction, what happens is it gets recorded at the county recorder’s office, and it is a property tax lien against that property. Okay. Now, that does not restrict any senior lender from doing what they need to do on the property. So, if they’re delinquent to the senior lender, the senior lender has all the remedies that are available to it to take the property back, go sell it and get their money out. Our PACE money stays on that property. So, it transfers from one owner to the next automatically, and it stays there as the PACE assessment, so for any one year our payment is looked at as a property tax. So, it’s included with the property tax at the borrower pays normally, right?  So that’s how it works.

J Darrin Gross  17:49

So, I’ve got my normal property taxes. Now I’ve added some PACE financing. Would that payback view essentially just the amortized payment of whatever the length of term of the amount of financing that I collected for the PACE?

Mansoor Ghori  18:12

That’s right. So, if it’s, you know, if it’s a 20-year loan, that assessment is fully amortized over 20 years, okay? And every year the payment stays exactly the same. So that does not change unlike the normal property tax, which may go up or down based on the value of the property. The property tax assessment for PACE stays exactly the same over the life of the assessment.

J Darrin Gross  18:45

Okay, so the PACE is a separate assessment from my normal property taxes.

Mansoor Ghori  18:51

Yeah, there’s two line items. One will be your normal property taxes. Then the second, you know, PACE assessment.

J Darrin Gross  19:00

Okay, so the PACE assessment is frozen for the life of that payback, correct? Correct. And is that independent then of the balance of my property tax that’s still subject to whatever? Okay. Yeah. Gotcha. You talked about the return this does using the PACE and you talked also about how the lenders view it in that, that it’s kind of separate. Does that lessen my need to bring capital to the deal then if I’m utilizing PACE financing for, like we’re just illustrating like on a typical deal, if you had, say, a million or $10 million, and you needed to bring 20% down payment, to get into the property and the bank lends, you know, 70% or 80% of the balance. Can you mention you could go up to 25%? Is that it? Is it possible that could be my down payment or equate to my down payment?

Mansoor Ghori  20:13

That’s a good question. So, PACE is generally used to replace either equity or mezzanine debt or some other types of financing. So, in a situation like you just mentioned, it wouldn’t replace all the equity. I mean, I think everyone wants to make sure that there’s at least some skin in the game by the property owner, whether that number is 10%, or a little bit more, a little bit less, you know, that’s, that’s something that’s has to go through underwriting, but everyone wants to see at least some money in there. But if you’re looking at a situation where you have to come up with 20% or 25% equity on a transaction with a senior lender, PACE can certainly replace some portion of that. So, you would come up with less money and use PACE for that difference.

J Darrin Gross  21:03

Got it, got it, but it certainly sounds a lot more attractive than the traditional whether it be a bridge loan or you know, some sort of construction financing.

Mansoor Ghori  21:14

And the other aspect of PACE is that it does not accelerate, and it is non-recourse to the property owner.

J Darrin Gross  21:23

Alright. You know, we talked about these, these different kind of line item projects and stuff. And my hunch is, is that or I guess my thought is that there’s likely some of these projects that could be partly PACE, partly non-PACE. You know, if you’re doing a rehab of a property, and you were upgrading you know, certain elements or there’s still a balance of things that were outside of the PACE is that typically the case?

Mansoor Ghori  21:59

Yeah, we’ll see. On almost every project we do, there’s a portion that’s PACE and a portion that’s not PACE. So, in a situation where there is a senior lender that’s doing the non-PACE and the PACE lender doing the PACE portion, there’s draw schedules that are agreed to upfront on the items that are PACE eligible, and the items that are that are non-PACE eligible. The senior lender then does the draws based on the on the items that are non-PACE, and we do our draws based on the ECM, or PACE eligible.

J Darrin Gross  22:37

Got it. Is there a minimum amount or a maximum? You mentioned a percentage of the market value, but is there a minimum amount that PACE works for?

Mansoor Ghori  22:54

So, there’s a minimum amount for us. We typically will not do a transaction below a half million dollars. But there are other PACE providers that will go below the half million dollars. On the upside, we don’t necessarily have any limits. So, we’ve got transactions that are out there with term sheets that are, you know, couple hundred million dollars to $500 million, so that the upside is unlimited, as long as it fits the ratios that we talked about.

J Darrin Gross  23:36

We talked a little bit about the transferability of the PACE financing. If I have PACE financing in place, and I’ve got say 10 years left on my PACE financing and let’s just say for round numbers that the balance owed is a million dollars. How is that reflected in a in a sale and subsequent sale to a new buyer?

Mansoor Ghori  24:08

That is a question that really has to be negotiated between the buyer and the seller. So, what I’ll tell you is that the million dollars will have a cost to it, which is the typical, which is your PACE assessment cost every year. But putting those retrofit ECM in there should give you also a reduction in utilities. So, theoretically, the savings from the utilities should offset the additional cost on the assessment. And, so you know, it shouldn’t really affect your NOI. So, your property value should theoretically be the same or maybe even higher. But there’s also deals I’ve seen where they take the assessment into consideration as part of reducing some portion of it in the purchase price. So, it’s all a negotiation based on what’s kind of put in and what it does today and why and cap rates and those kinds of things.

J Darrin Gross  25:17

Well, it still seems like though the, from a performance thing, if the improvements are done right away, and I’m getting the benefit of those right away without going negative for multiple years waiting for the payback, that the project owner, the seller and I would assume that the buyer would recognize that, unless they’re at the tail end of these things, and they’re nearing the need for replacement again, kind of thing, but I would think that there would be some sort of recognized benefit there.

Mansoor Ghori  25:57

Yeah, and I’ve seen transactions with that concept for sure. And that makes a lot of sense because that’s the way that we look at PACE.  Look, because you’re actually saving more than you’re paying that should not negatively affect NOI, and why it should be positive to your NOI. And so, your NOI should go up. And if you attach a cap rate to your increase, NOI, your valuation on your property should go up. Right? So that’s, that’s certainly one of the arguments there. And, but like you said, if you’re down, you know, 10 to 15 years into this thing, and you’re kind of at the very tail end, you know, maybe more of the savings were at the, the front end versus the tail end and it may not be the case at the very end.

J Darrin Gross  26:44

Got it. What have you seen any resistance to PACE financing, or?

Mansoor Ghori  26:57

So that’s a good question. So, in the early years of PACE, there was a lot of resistance from senior mortgage holders primarily because they’d never seen PACE before. This was a, you know, kind of a new concept. They didn’t really know how it works. And they didn’t really understand, you know, what the remedies were in a situation, whether it was, you know, issues from their perspective with the property owner. And over time, over the last three or four years, what we’ve seen is there is a lot more now understanding of what PACE is and how it fits and how it works with a senior mortgage, and we’ve seen less and less and less resistance. So other than that, we’re seeing, you know, a lot of eyes opening from a commercial property owner perspective, because they’d never heard of PACE. And they’re now looking at this saying, wow, that would be great in our cap stack. Especially the guys that are doing the new construction gut rehab projects, because as you know, banks are getting tighter where they can kind of at the end of a cycle now. So, loan to cost ratios from banks are tightened. We’ve got the EB five program that’s not as robust as it used to be due to political issues. So, there’s more, there’s more gap in the cap stacks for those new projects that need to be filled and PACE is a perfect kind of, you know, step to put in there to kind of fill that gap.

J Darrin Gross  28:39

You know, I’m an insurance broker. And, I mean, the capital improvements are just ongoing as far as what insurance companies are looking at. They’re recognizing a lot of the claims that they’re paying or are related to these older systems. And as such a lot of the carriers are kind of narrowing their view of what a desirable risk is. And they’re usually saying something that’s, you know, 30 years or newer. And, and this is, to me, this is like just the opportunity for somebody that has a property that not only are they I mean, if they don’t take care of it through something like PACE, we’ve already talked about the ongoing costs, and the negative return or the you know, how many years it takes to pay it back. This could have multiple benefits, as opposed to just the, you know, you’re getting your system replaced, you’ve got long-term financing, which makes you cash positive, and now you can make your insurance company happy.

Mansoor Ghori  29:44

That’s right. So, I mean, I think you hit on some key points here. So, you know, one of the things that property owners do is they’re looking at either their deferred maintenance that they’ve got to do, or and they’re looking at the capital expenditures for each year going forward, and they typically don’t like to go beyond one year at a time, because it’s just a lot more capital that they have to kind of invest. What PACE does it allows them to look longer than one year allows them to look through, you know, 2, 3, 4 years down the road, and pull all those ECM that they’re going to do over that time period, into one holistic project that they can do, because of the fact that there’s long term financing, and it should be net positive from day one. That’s great. All of a sudden, their properties are getting improved much quicker than, you know, three, four years down the road.

J Darrin Gross  30:39

Yeah. Are you trying to try to finance it out of you know, cash flow and you basically are in zero or negative or are waiting for everything to be done, and it’s just ongoing because you can’t get it all done? Oh, yeah. It’s great. Any advice to a real estate investor, that’s looking to get started and are looking for PACE? Or is there something that you should they should look for? Be aware of?

Mansoor Ghori  31:10

You know, I think I think the way they should do it is, you know, they should get a hold of people like us and walk through what they’re trying to do. We have folks here that can kind of help them through what a project would look like and what they have to do to pull together to at least get an indication of whether that’s a deal that can get done through PACE or not. And if it’s not, then what are the things that are missing? But that would seem to be the easiest way to do it

J Darrin Gross  31:39

Got it.  Mansoor, if we could, I’d like to shift gears here for a second. As I mentioned to you, by day, I’m an insurance broker. And we work with our clients to assess risk and try and manage the risk. And there’s a couple different strategies we typically consider. The first is we ask can we avoid the risk. The second we, if we can’t avoid it, we look to see if we can minimize the risk. And if that’s not a possibility, then we look to see if we can transfer it. And that’s what an insurance policy is. It’s a risk transfer mechanism. And so, I like to ask my guests, if they can take a look at, you know, their environment and how they are working with investors and what they see and if they can, to identify what they see is the biggest risk. And so, if you’re willing, and just be clear, I’m not necessarily looking for an insurance related answer. Kind of a blank slate. You can define it however you choose. But again, if you’re willing, I’d like to ask you Mansoor Ghori, what is the biggest risk?

Mansoor Ghori  32:55

So, I’ll kind of address this from a PACE perspective because I think from more of a higher-level perspective in terms of the economy, etc. I don’t necessarily see a downturn in the economy as a risk to the PACE in which you actually think that is an opportunity. Because all the rest of the money in the capital is going to get tighter. And PACE will provide an opportunity for them to help them get projects done even in a downturn. I think from a PACE perspective, the thing that I worry about most is that we have to make sure that the way that PACE deals are being done with diligence underwriting. They’re being done in a way where these things can get rated, securitized and sold to investors. If there are people that come in and don’t do it correctly, I worry that there could become issues in the PACE industry or it could be deals up blow up, you know, if you think about PACE in general historically, there has hasn’t been any major blocks for PACE in the commercial space. And since the history of PACE, right, that’s on the commercial side. I’m not saying that’s so on the residential side, but on the commercial side, they’re being underwritten, like normal commercial loans. And so, they’re a lot safer from that perspective. Our worry is that people are going to come into the space as it becomes more active and starts growing, and they’ll do it incorrectly. So, we’ve tried to find ways to mitigate that. So, we created something called a C-PACE Alliance, which is an industry group of pretty much every major commercial PACE lender, the service providers that are working on that are part of the PACE, the commercial PACE area. And what we’re doing is we’re creating templates on how to underwrite, templates on how to administer, templates on what the statute for these programs should look like in each new state, so that there is a box that everyone can play inside and not go outside the box. That make sense?

J Darrin Gross  35:16

That’s absolutely genius. Because, you know, just like what you were describing, it hasn’t blown up. It only takes one rogue operator to see the opportunity and exploit something that wasn’t intended and run roughshod over it. And before you know it, it’s blown up and it’s not available for anybody. So that’s right.

Mansoor Ghori  35:39

That’s right.

J Darrin Gross  35:40

That’s really great and I applaud you and your efforts, and I think that also, you know, definitely keeps you at the forefront as far as the thought leadership goes as far as the PACE financing and would continue to make you guys a noteworthy resource, so that’s great.

Mansoor Ghori  36:05

Yeah, absolutely.

J Darrin Gross  36:06

So, yep. Mansoor, where can listeners go if they would like to learn more or connect?

Mansoor Ghori  36:13

Sure. So, our website is petros-pace.com.

J Darrin Gross  36:22

Got it.

Mansoor Ghori  36:22

And go there. There’s a lot of information about PACE, how it works for different types of projects, different types of properties. We’ve got case studies there, we’ve got phone number, you can get a hold of us, we can kind of walk you through what it looks like. You can see what our background is. It’ll give you a good perspective on what PACE is and how it works.

J Darrin Gross  36:44

Awesome. Mansoor, I can’t say thanks enough for taking the time today. I’ve enjoyed it. Learned a lot. And I hope we can do it again soon.

Mansoor Ghori  36:53

Sounds great. Thanks, Darrin. Appreciate your time.

J Darrin Gross  36:55

Alright. For our listeners, if you liked this episode, don’t forget to like, share, subscribe. Remember, the more you know, the more you grow. That’s all we’ve got this week. Until next time, thanks for listening to Commercial Real Estate Pro Networks. C R E P N Radio.

Outro  37:13

You’re listening to C R E P N Radio for influential commercial real estate professionals. For more information on this or any of our guests like us on Facebook C R E P N Radio.

Originally published at Commercial Real Estate Pro Network

COVER: Commercial PACE as an alternative for stalled CRE projects

Originally published at Asset Securitization Report

The outbreak of COVID-19 has had a devastating impact on commercial real estate.

Nationwide shutdowns of restaurants and non-essential commerce has curtailed traffic at retail shopping centers and malls. Hotels have had few tourists or business travelers checking in. Multifamily apartment buildings have tenants who experienced sudden job loss and are in need of rent forbearance – and are located in states like New York that have a moratorium in place on evictions.

These business interruptions are threatening a secondary ripple with lenders and investors in mortgage-backed securities that finance these properties.

For some of these properties, the halt in revenue has resulted in a stoppage in projects aimed at securing improved energy-efficiency standards and other green-friendly upgrades.

The disruption is creating an opportunity, however, for alternative finance sources to fill the gap. More specifically, the sponsors of property-assessed clean energy (PACE) financing in the commercial sphere.

Last month, an executive with Greenworks Lending penned a blog on a PACE industry trade-group Web site promoting commercial PACE programs as a potential stopgap for property owners and developers facing a sudden cash-flow crunch from the shutdown brought on by the coronavirus pandemic. Aaron Kraus, the vice president of market activation for Greenworks, wrote that commercial PACE programs in certain states have the capability of filling in “retroactively” for a property’s project costs.

“Commercial and multi-family properties that have recently had qualifying energy work done may find themselves with temporary financial challenges from a reduction in cashflow,” Kraus wrote. “In these cases, C-PACE can come in and help replenish a property’s reserves, provide liquidity for operational costs, and even potentially help other lenders in the capital stack reduce their exposure.

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“For properties nearing completion, C-PACE can also offer funds for cost overruns and lender pullback, helping to fill that difficult gap,” he added.

Traditional lenders have taken a 90- to 120-day pause to assess the health of their portfolios, said Mansoor Ghori, CEO, co-founder and managing director of Petros PACE Finance, headquartered in Austin, Texas.

“Borrowers are saying ‘let’s figure out how to get these done,’ as they see other sources of capital drying up,” Ghori said.

For Petros, business is carrying on despite of the effects of COVID-19. The company last month announced a doubling of its available credit facility to fund projects through a consortium led by ING. Petros also completed its seventh privately rated securitization for an undisclosed client asset.

While the lending sector grapples with two overarching effects of containing the coronavirus outbreak — the tightening of available capital to support new lending and almost feverish demand from their customer base, C-PACE lenders have been able to carve out business and keep operating.

“One of the great things about our financing is we have not had to pull back, and we have not been subject to some of the capital calls that other lenders have been subjected to,” said Jessica Bailey, co-founder and CEO of Greenworks, headquartered in Darien, Conn. “We have got stable and committed capital that we are deploying in some of the same ways we have before.”

Retroactive C-PACE financing has come to the fore since outbreak responses have disrupted the regular cycling of capital through commercial buildings. This has been a good time for building owners to move on retroactive deals, says Bailey, especially since stay-at-home orders have kept tenants out of the buildings, pushing up vacancy rates and missed rents, or for building owners in the manufacturing sector, whose companies have seen a supply chain disruption.

“Our financing has been able to retroactively help finance what they would have paid cash for,” Bailey said, adding that building owners can also “pull a little equity from their buildings.”

Not all of the states with C-PACE programs (22 at the end of 2019) authorize retroactive funding, according to Greenworks’ Kraus. In addition, there may be locality differences on the rules (Prince George’s County in Maryland permits retroactive financing, but neighboring Montgomery County does not). “Further, the length of time can differ between markets,” he wrote. “In Michigan, the look-back period is 3 years. In Connecticut, that look-back is only 1 year.”

What makes C-PACE attractive for borrowers in the first place are the favorable rates and terms offered. C-PACE is a public/private financing tool that uses private capital to finance projects via annual or semi-annual property tax assessments by local governments that guarantee the financing. This results in property liens, which is a source of controversy for opponents of these types of loans (the Mortgage Bankers Association vehemently opposes PACE as a vehicle for residential energy upgrades, such as solar panels).

Last month, according to published reports, officials with a Colorado county opted out of the state’s C-PACE program with concerns taxpayers would be on the hook for a sports tourism complex being constructed with C-PACE funds. One of the Weld County commissioners voting to pull the county out told a local newspaper that “government shouldn’t be involved in a personal transaction,” he said. “You don’t need the government to do your collections.”

Nevertheless, Petros PACE’s Ghori says C-PACE holds much more potential than just as a sustainability tool until conventional sources of lending are revived, Ghori said.

“Tons of jobs are being created to finish these projects,” he said. Currently unemployed skilled workers are going to be looking for certain jobs that might not come back, but they might have a chance at finding work in an economy that prioritizes climate and green initiatives. “New York has passed several initiatives requiring property owners to upgrade their properties in a period of time. This will absolutely be a tremendous help to New York in its recovery from this pandemic.”

Heading into 2020, New York state and New York City were expected to be an epicenter of PACE activity, which in turn would spur growing levels of securitization, according to a research report from DBRS Morningstar.

C-PACE investment nationwide had reached about $1.5 billion through 2019, and almost half (49 percent) of those funds were invested in energy efficiency projects, according to data from PACENation, a non-profit, industry membership group that supports the expansion of PACE financing and provides research on PACE activity.

In its breakdown of C-PACE investment by state, PACENation found that California leads the industry, with $293 million in investments, followed by Ohio, with $241 million and Connecticut, with $144 million.

But last year, a law re-authorizing the state’s C-PACE program (Energize NY Open C-PACE) was passed out of Albany, followed shortly by a New York City Council act which aimed at reducing greenhouse gas emissions from city buildings via C-PACE financing. Both were expected to make New York the new king of PACE originations.

Last year, Cliff Kellogg, executive director of the C-PACE Alliance, said the city’s greenhouse reduction legislation could be a huge driver for originations. Some energy advocates think this is the wave of the future – to require greenhouse gas reductions and the financial means to comply, he said. “New York City is really at the cutting edge to show the potential of the C-PACE market,” Kellogg said last fall.

Those plans at the city level are temporarily stalled by the outbreak. The New York City Energy Efficiency Corp. which administers the PACE program has delayed its first acceptance period of applications, according to reports.

One example of the promise for the city and state programs was the state program’s financing of a large hemp/vegetable farm operation, Wheatfield Gardens, which was retrofitted to accommodate, among other commodities, the production of cannabis for the growing CBD market.

Around 2015, Wheatfield Gardens CEO Paal Elfstrum and investors sought to upcycle an old greenhouse that had previously produced tomatoes and cucumbers, and convert it to growing lettuce and medicines. As a consultant to cannabis and hemp growers previously, Elfstrum knew that the growing facility would have to be supplied with a lot of power, and much of that power would have to be generated onsite.

“Besides labor, energy will always be the biggest expense on a greenhouse or vertical farm balance sheet,” he said. “Therefore finding innovative ways to cut those costs is business imperative.”

Elfstrum said and his partners kept running into difficulty finding financing for the necessary conversions and upgrades, because the Wheatfield, N.Y.-headquartered company was a startup with no operating history.

“It seemed the only way they would lend you money is if you were willing to give a personal guarantee or had the money in the bank already,” Elfstrum told Asset Securitization Report in an email response.

Wheatfield’s access to C-PACE funding was made possible from the second iteration of Energize NY Open C-PACE in New York. In 2014, as the Energy Improvement Corporation (EIC), a local development corporation and state operated non-profit, PACE financing was first launched allowing clean energy financing via a property tax assessment. The EIC’s original Energize NY program was authorized to provide capital directly to commercial real estate borrowers.

The EIC’s former program quickly ran into a quagmire of difficulties. One particular issue was its closed nature. The entity appointed just one source of capital for all the financing that it extended to borrowers, the Bank of America, said Susan Morth, CEO of Energize NY, who worked at the EIC but was not the architect behind the original program.

“They couldn’t be securitized because the EIC was acting as a bank and was issuing bonds,” Morth said. “Those bonds were being purchased only by that money-center bank; that was Bank of America.”

The EIC did not run any credit checks on borrowers when underwriting the financing. It based underwriting heavily on the property’s condition and market value, Morth said. Borrowers paid high fees, such as an upfront fee of about 4.5 percent of the cost of the project. Also, the program charged an interest rate of over one percent, making the cost of funding more expensive less competitive. Another concept stymied the program: when municipalities joined the program they agreed to be contractually obligated to backstop PACE loans within their jurisdictions.

In 2018, the EIC scuttled its old program. In January, as the new CEO of Energize NY Open C-PACE, Morth began to rebuild the program from the ground up. Morth, believes that New York’s new program will bring positive revival to C-PACE financing in the state. “New York [PACE] is a good program going forward,” Morth said in an interview. “Previously, it was a closed program, as only the EIC had the capital. The differences are like night and day.”

The country’s largest cities are also putting PACE mechanisms into place. In December 2019, the Chicago City Council launched Chicago PACE. The self-financed program utilizes user fees and a city bond issue to provide start-up capital, according to the city’s planning and development office. Counterpointe Energy Solutions and Chicago-based Loop Capital Markets partnered to create Loop-Counterpointe PACE, the program administrator, and approved the first project in December. Prime Group got approval for $21.2 million to finance energy-related upgrades on a historic office building on LaSalle Street, as it becomes the 233-room Reserve Hotel, according to the Chicago Sun-Times.

What’s Next for C-PACE Financing?

An in-depth update on the dealmaking climate and policy initiatives for the popular energy efficiency financing program.

Marriott Syracuse Downtown. Image courtesy of Petros PACE Finance

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As 2020 began, the year was shaping up to be the strongest yet for the use of Commercial Property Assessed Clean Energy (C-PACE) financing. C-PACE had its best year ever in 2019, with approximately $677 million in C-PACE investments—bringing the total over the past decade to more than $1.5 billion, according to PACENation a nonprofit association that advocates for PACE financing.

C-PACE was on its way to another record-breaking year before the novel coronavirus hit the U.S., said Cliff Kellogg, executive director of C-PACE Alliance, a network of C-PACE industry stakeholders. C-PACE financing had risen from just six deals valued at about $3.4 million in 2009 to last year’s record-breaking total—a sharp increase from 2018, when there were 460 deals with C-PACE financing of about $270.2 million, according to PACENation.

Commenting on the pandemic’s potential impact on C-PACE, Kellogg said, “It’s too difficult to predict how the volume will compare to last year. It could be over in two weeks. It could be over in six to eight months.”


C-PACE allows commercial property owners to get low-cost, long-term financing for energy efficiency, water conservation and renewable energy projects that is then repaid as an assessment on the property tax bill for current and future owners. Currently, 37 states and Washington, D.C., have enacted authorizing legislation; the program is active in 20 states and Washington.

Two of the largest lenders in the space, Petros PACE Finance and Greenworks Lending, agree that it’s too soon to determine how much the COVID-19 outbreak will affect their businesses and the C-PACE market. “For sure we’ve seen some slowdown,” said Jessica Bailey, CEO & co-founder of Greenworks Lending in Darien, Conn. “We closed all our offices down. We suspended all travel for a couple of weeks.” But, Bailey added, Greenworks has “plenty of deals in the works. I don’t think those will go away.”

Greenworks, which Bailey co-founded with COO Alexandra Cooley in 2015, closes dozens of deals a month, usually ranging from just under $2 million to more than $10 million. Using the example of a $750,000 loan for an office property owner to swap out an aging boiler, Bailey concluded that “those are the deals that happen no matter what’s going on in the economy.”

Mansoor Ghori, co-founder & CEO of Petros PACE Finance in Austin, Texas, said his firm has at least four deals closing in the next few weeks. He expects there may be some pause in the market as the situation continues to evolve but also notes there could also be “opportunity for the PACE side of the business.” He said banks may pull back a little bit on lending and create more space in the capital stack for C-PACE to fill in some of the gaps.

Kellogg noted he still expects volume of C-PACE financing to continue upward because it’s a capital markets solution to a policy priority of converting to a more energy-efficient and less carbon-intensive economy.

“C-PACE financing will increase because it solves an economic puzzle for businesses that own their properties and for commercial property investors,” Kellogg said, adding that C-PACE financing is less expensive than mezzanine debt and addresses the requirements by local governments that are raising the bar for commercial properties in terms of energy efficiency with more stringent building codes and performance standards.

STATES, CITIES TAKE STEPS

There will also be more C-PACE investments because more states are approving enabling legislation and more counties and municipalities are creating program administrators or hiring third parties to run the programs, Kellogg said.

Late last year, new programs were authorized or took effect in New York, Illinois, Pennsylvania, Oklahoma, Virginia and Massachusetts, while Washington has a bill pending on Gov. Jay Inslee’s desk. Other places to watch for this year include:

  • New Jersey: the state Senate passed a bill in June 2019
  • Illinois: The city of Peoria, along with Will, Lake and McHenry counties, are expected to take steps
  • Pennsylvania: Pittsburgh and Allegheny County considering adoption
  • Texas: San Antonio’s city council authorized C-PACE, seven years after the state approved the creation of local programs

Kellogg said C-PACE is monitoring new legislation or technical amendments in 10 other states this year. Part of the reason some states have not activated their programs is due to technicalities that needed to be worked out. “Some states enacted enabling legislation that includes non-traditional terms that are unworkable or unappealing to private investment,” he said. Examples include a term extinguishing the lien in the event of a foreclosure or term subordinating C-PACE assessments to other mortgage holders’ secured interest.

Bailey and Ghori noted that their firms and other C-PACE lenders are expecting the New York City market to open up later this year. In April 2019, the New York City Council passed the Climate Mobilization Act, Local Law 97, requiring large buildings, including condominiums and cooperatives, to cut greenhouse gas emissions by 40 percent by 2030 and 80 percent by 2050. C-PACE-enabling legislation was included in Local Law 96. Kellogg said that the New York City Energy Efficiency Corp. is expected to issue implementing rules for comment shortly. According to Bailey, those changes in New York City could enable the multifamily sector “to become a much more interesting market for us.”

C-PACE DEALS

Petros funded its first C-PACE project in New York state earlier this year when it closed a $9.9 million transaction with Brine Wells Development, an owner and developer of hospitality properties, to finance energy-saving upgrades as part of the restoration of the historic 261-key Marriott Syracuse Downtown hotel. Fifty rooms and event space have been added to the 1920s-era building along with upgrades to the HVAC, plumbing, lighting and electrical systems.

While hotels are the most popular asset class receiving C-PACE financing, Ghori said other Petros deals have included funding the conversion of an old Ohio warehouse into a self-storage facility, industrial properties in Michigan, office properties in Minnesota and Texas and retail for several large REITs, among other projects. Last spring, Petros closed a $1.7 million transaction in Lincoln, Neb., to incorporate energy-saving measures in the construction of a 92,000-square-foot indoor sports facility.

Wheatfield Gardens. Image courtesy of Greenworks Lending

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Among the more unusual projects for Greenworks Lending was a $2 million C-PACE financing that closed late last year for Wheatfield Gardens, a hybrid greenhouse vertical farm in Niagara County, N.Y. The project consists of a combined heat and power system that would be the base of a microgrid facilitating the production of hydroponic lettuce and hemp. It was the state’s first C-PACE project to exceed the $1 million mark.

The firm’s biggest deal to date was a $10 million C-PACE financing to renovate The Plaza Hotel, a historic Art Deco-styled 19-story hotel in downtown El Paso, Texas, into a modern facility with 131 guest rooms, restaurant, bar and event space.

HOTELS CHECK IN 

Hospitality deals topped the list of building types receiving C-PACE funding over the past 10 years, coming in at approximately $297 million and accounting for 29 percent of the 2,358 transactions through 2019, according to PACENation. Office followed at about $134 million (13 percent); healthcare at $124 million (12 percent); retail at $97.2 million (9 percent); multifamily at approximately $93 million (9 percent); mixed-use at $89 million (9 percent); and industrial at $86 million (8 percent). There is an “other” category with $49 million in financing, or 5 percent, followed by agriculture, religious, recreation, services, education, nonprofit, agricultural and government, all representing about 1 percent each or less of the total percentage of C-PACE funding, on the PACENation list.

The Plaza Hotel in El Paso, Texas. Image courtesy of Greenworks Lending

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Ghori explained that hospitality sector owners and developers were the first to pick up on the use of C-PACE funding. “Typically, the hotel capital structure has lots of different kinds of incentives. They are used to looking at different forms of financing and this was something that really fit into what they were trying to do.”

California has had the most C-PACE financing activity at $486 million, according to PACENation. Ohio follows at about $224.5 million.

Rounding out the top 10:

  • Connecticut, $141 million
  • Minnesota, $123.2 million
  • Texas, $101.2 million
  • Missouri, $82.7 million
  • Colorado, $63.4 million
  • Wisconsin, $55.4 million
  • Utah, $54.8 million
  • Washington, D.C., $41 million.

Originally published at Commercial Property Executive

Petros PACE Finance Substantially Increases Credit Line and Expands Banking Syndicate to Fuel Growth

AUSTIN, Texas, April 16, 2020 / PRNewswire/ — Petros PACE Finance, the leading provider of Commercial Property Assessed Clean Energy (C-PACE) financing, recently increased its ING Capital LLC (“ING”) credit facility. A three-bank syndicate consisting of Stifel Bank, Midwest BankCentre and Providence Bank joined the ING facility with the additional capital.

“We are pleased to build on our strong relationship with ING with the addition of these new financial partners,” said Jim Stanislaus, Co-Founder and Chief Financial Officer at Petros PACE Finance. “Andy Meyer, Senior Vice President at Petros, has a long-standing relationship with the three-bank syndicate that paved the way for a seamless integration into our financing platform.  This increased capacity will allow us to keep pace with our projected growth trajectory and give us even more flexibility with our committed financial off-take partners.  ”

The expanded facility will add to the already significant war chest allowing Petros to close on billions of dollars in C-PACE transactions nationwide and provide additional flexibility to execute on strategic initiatives as the firm aggressively scales its platform.

“Our deal pipeline has grown exponentially, and we are continuing to see even more opportunities in the C-PACE market, even amid this drastic constriction in the broader lending environment for commercial real estate projects,” said Mansoor Ghori, Chief Executive Officer and Co-founder at Petros PACE Finance. “This line expansion marks another milestone for Petros and will allow us to more fully take advantage of this unprecedented disruption in the economy.”

“We believe Petros PACE Finance is well-positioned for continued growth in a dynamic, emerging market space and has shown impressive progress in building out its C-PACE financing platform,” said Sandeep Srinath, Director – Global Securitization Group at ING. “We’ve developed a strong working relationship with the team at Petros and this credit line serves as an extension of the confidence that we have in them.”

“We have enjoyed building our relationship with the team at Petros and ING,” said George Kriegshauser, Vice President Commercial Lending at Stifel Bank. “We are impressed with the fundamentals of the Petros business model and look forward to a long-term partnership together.”

Wes Burns, Market President of Providence Bank added, “As a steward to the communities we serve, it is very rewarding to participate in financing related to clean energy improvements through the application of C-PACE.”

“As a values-based financial institution, Midwest BankCentre is proud to partner with Petros and ING as they work to bring energy efficiency and renewable energy to more people and invest in the long-term sustainability of the communities we serve,” stated Orvin T. Kimbrough, Chairman and CEO of Midwest BankCentre.

About Petros PACE Finance

Petros PACE Finance, LLC is the national leader in the C-PACE marketplace, dedicated solely to providing long-term C-PACE financing to commercial property owners seeking to lower energy costs, reduce their carbon footprint and increase property values. The leadership team has over 100 years of executive-level experience in commercial lending and structured finance, with direct long-term institutional investor relationships. With billions in committed capital, Petros is able to close transactions in eligible C-PACE markets nationwide. To learn more about Petros PACE Finance visit our website at petros-pace.com/.

Media Contact:
Kylie Fitzpatrick
512-599-9042
kylie@petrospartners.com

Originally published on Cision PR Newswire

PACE Lenders Riding Out Crisis

The coronavirus crisis is disrupting the businesses of Property Assessed Clean Energy lenders, many of which are adjusting their near-term strategies in ways that eventually could affect the types and volumes of assets available for them to securitize.

Consider commercial-property projects. As new construction slows, some lenders in that area have placed more emphasis on financing energy- and water-efficiency retrofits of existing facilities and refinancing borrowers’ current debts.

The shift is tied to a situation in which banks increasingly have halted senior mortgages for new construction, leading warehouse lenders to freeze financing for the PACE portions of those projects as well. That could set back PACE lenders by 3-4 months. Without a senior mortgage, “someone’s got to fill the gap in the capital stack, and that money’s not easy to come by right now,” Petros PACE Finance chief executive Mansoor Ghori said.

By comparison, financing of upgrades to existing buildings is less vulnerable because there’s no mortgage lender involved. PACE lenders had placed less emphasis on such projects in favor of new-construction loans, which tend to be larger. Now, they’re reversing course.

Some commercial PACE programs allow for the refinancing of recently completely energy efficiency improvements as well. Petros, for example, is in the process of funding separate refinancings of $10 million and $5.5 million. “We’re going to see more of those in the short-term,” Ghori said.

Ghori’s Austin-based operation also closed on one refinancing arrangement last week and expects to close on a new-construction transaction this week.

Residential PACE lenders also are pitching the idea of refinancing recently completed projects. Part of the appeal in that case is that because the financing is levied alongside property taxes, the homeowners can stretch payments out over long periods. “We can come in post-facto and put money back in their pockets,” said Greg Saunders, chief financial officer at Ygrene Energy. “It’s like a line of credit people don’t know they have.”

While some of Ygrene’s key residential markets are under shelter orders, including certain areas of Florida and California, the Petaluma, Calif., company believes it can keep business flowing because it markets its loans through contractors, which are allowed to continue operating as essential services. “The question is whether homeowners are comfortable engaging with a contractor. Do they have the time and money to think about taking on a new obligation?”

Saunders asked. Saunders acknowledged that Ygrene has seen a dip of about 10% in applications from residential borrowers in the past two weeks and anticipates a further decline. Still, he believes PACE lenders have an advantage over others that finance similar energy-saving improvements. Unsecured-loan originators, for example, have seen major declines in their access to warehouse financing amid the outbreak.

When it comes to loan performance, and ultimately collateral quality for the lenders’ asset-backed bonds, the economic slowdown poses some risk. “As far as residential PACE is concerned, I’m waiting to see if there’s any fallout from the fact that millions of people have been laid off,” Ghori said. “If some have recently done PACE projects, they may not be able to pay their PACE assessments.”

That said, PACE financing for commercial projects typically carries loan-to-value ratios of less than 20%. The upshot is that the primary risk would be a delay in payments, as opposed to a loss of principal. “I think when you have a retail mall that’s either shut down for some period or tenants are saying they can’t make the rent, at some point you’re going to see requests for deferrals, though that probably won’t happen until the second quarter,” Ghori said.

For now, the market for new PACE-loan bonds has frozen along with the rest of the asset-backed bond sector. Renovate America of San Diego squeezed in a Rule-144a deal of $54.4 million on March 11, just before the market downturn accelerated. In that case, the company’s funding costs benefited from low benchmark rates. The deal was the only PACE-loan securitization to price during the first quarter.

PACEFunding of Los Gatos, Calif., had been aiming to complete a Rule-144a transaction in late April, but that offering now is on hold. Ygrene hopes to come to market in May with a deal that will be a bit smaller than its previous one, perhaps $230 million to $240 million. Like several of the company’s previous issues, it will be backed by a mix of residential and commercial PACE loans.

PACE lenders completed four securitizations totaling $760 million in 2019, down from six deals for $896.9 million in 2018, according to Asset-Backed Alert’s ABS Database.

 

Originally published on Asset-Backed Alert.

C-PACE Financing Incentivizes Green Construction

Though property assessed clean-energy financing has been around for more than a decade, it didn’t really gain traction until recently. In fact, according to Ethan Elser, EVP of PACE Equity, there had not been “material volume and awareness” until the past two to four years.

Mansoor Ghori, co-founder and CEO of another PACE lender, Petros PACE Finance, said demand has exploded over the past two years, specifically. “I’ll tell you it exploded on new construction projects in particular, but when you dig down and say, ‘OK, well, what part of new construction? Is it office, is it hospitality, is it something else?’ The hospitality segment of that is the fastest growing part of that.”

Portman Holdings received $54.7 million in financing from CleanFund’s Commercial Property Assessed Clean Energy Capital to fund sustainability upgrades for its upcoming 700-room Hyatt Regency Salt Lake City. Photo credit: CleanFund Commercial PACE Capital

arrow-icon-down
arrow-icon-downRendering of Hyatt hotel in Salt Lake City

What is C-PACE

Simply put, C-PACE financing (there are two types of PACE programs, one for commercial properties—C-PACE—and another for residential properties) is a low-cost, long-term financing tool designed to fund environmentally friendly features for renovation and development projects. According to Woolsey McKernon, formerly SVP/chief revenue officer at CleanFund Commercial PACE Capital, C-PACE financing generally covers 15 to 25 percent of a project’s total costs.

“What PACE does is it piggybacks off of the assessment law and we in essence are providing funding to a private owner who will then utilize those funds for investment in public good and public good in this instance is making their building more energy efficient with insulation or new window glazing, putting in a more efficient chiller or boiler, putting solar up on the roof, low-flow fixtures, shower heads, urinals, toilets and in the state of California, seismic [elements],” explained McKernon.

 

Differences Between C-PACE and Traditional Financing

One of the most fundamental differences between C-PACE and traditional financing is length of term. While the typical construction loan may have a term of three, five or possibly seven years, said McKernon, C-PACE financing can go up to 30 years.

Ghori noted another difference: C-PACE is nonrecourse to the developer. “So what that means is that if there’s a delinquency on the PACE portion of the assessment, we as PACE lenders can’t just go in there like a mortgage lender and say ‘Hey, we’re foreclosing on this property, we’re going to take it back, sell it and get our money out and then, you know, we’ll give you whatever’s left over.’”

Instead, Ghori explained, the PACE lender would have to go to the taxing authority and ensure that they have it marked as a delinquent property tax assessment. From there, that taxing authority would go about collecting on that assessment as it would a normal delinquent property tax. “That could take six months, it could take two years, it could take three years,” said Ghori. “So, we’re just at the mercy of the taxing authority.”

Both Ghori and McKernon highlighted one other key difference: C-PACE financing travels with the property. “A traditional debt has to be repaid when one person sells the property to another person,” said McKernon. “Very rarely do people assume the existing loan that’s in place because it has to be completely re-underwritten. But in the case of PACE, what’s unique about it is it just travels with a property.

 

Challenge

One of the key things to keep in mind with commercial property assessed clean-energy financing, according to Elser, is the developer must let the senior lender know of the C-PACE lender’s participation. Though he noted that lenders are becoming more knowledgeable and comfortable with C-PACE financing, he said “there’s four times as many, 10 times as many who are not familiar, or maybe have some misunderstandings about how it works.”

Ghori also emphasized this point, but described it as more of an evolutionary challenge. “We’ve seen, in the earlier days of PACE in particular, there was a lot more reticence on allowing PACE and getting the consent to allow PACE on projects because bankers didn’t really understand what PACE is, how it fits, what its lien position is, how it works, etc.”

Solution

Elser suggested educating the senior lender. Using a C-PACE loan is “something that a developer would want to qualify early and really ensure that they’re working together with their C-PACE capital provider on educating the lender, getting them comfortable with how PACE works so that they’re ultimately going to approve that in the end.”

Both Elser and Ghori had a similarly optimistic view of the issue. “At some point everyone will be aware of PACE and how it works, but this is kind of an early product still,” said Elser.

 

Challenge

Today, less than half of U.S. states have active PACE programs in place. Ambrish Baisiwala, CEO/chairman of Portman Holdings, a development company that recently received $54.7 million in C-PACE financing for one hotel project, said this limited availability is the key thing that would keep it from using C-PACE in the future.

“From our point of view, it’s a question of whether it’s possible and available in the location that we are taking the project,” said Baisiwala. “So, whether that location has the regulation in place or not and whether we can find a C-PACE vendor who would be interested in the project and the opportunity.”

Solution

The simplest solution to this issue is to wait. While not even half of U.S. states have C-PACE programs launched and operating, nearly three-quarters have active PACE-enabling legislation in place.

 

Originally published on Hotel Management by Chuck Dobrosielski.

Petros PACE Finance Provides $9.9 million in C-PACE Financing for Restoration of Historic Hotel in Syracuse, New York

Photo of Marriott in Syracuse

AUSTIN, Texas, Feb. 24, 2020 /PRNewswire/ — Petros PACE Finance, LLC (petros-pace.com) has closed a $9.9 million Commercial Property Assessed Clean Energy (C-PACE) transaction with Brine Wells Development, an owner and developer of hospitality properties, to finance energy-saving upgrades as part of the restoration of a historic hotel in downtown Syracuse, New York.

Brine Wells used the funds to recapitalize the renovation of the iconic Marriott Syracuse Downtown, serving as the catalyst for the revitalization of the south end of the Syracuse metropolitan market. The 261-key hotel opened in 2016 following a historical restoration of the 1920s-era building formerly known as Hotel Syracuse. Further renovations, expected to complete in May 2020, will add 50 rooms, along with additional function space and a restaurant. Energy-efficient measures incorporated in the renovations included improvements to the property’s building envelope, plumbing, HVAC, lighting and electrical systems.

“This is the first C-PACE project Petros has funded in New York, marking the second new market we’ve expanded into so far in 2020,” said Mansoor Ghori, Co-Founder and CEO of Petros PACE Finance. “We anticipate New York becoming a large market for C-PACE and look forward to working with more owners and developers like Brine Wells as they seek a more efficient way to capitalize challenging projects that also align with the state of New York’s broader energy efficiency and carbon reduction goals.”

C-PACE is a relatively new financing tool for energy and water efficiency projects that has grown quickly in recent years. As a low-cost, long-term permanent financing product secured as a property tax assessment, it provides developers with an alternative to mezzanine debt and equity that lowers overall capital costs and allows them to invest in higher efficiency building designs.

“C-PACE provided cost-effective financing for energy-efficient improvements needed to adapt a unique piece of Syracuse history to meet the needs of modern guests,” said Ed Riley, CEO of Brine Wells. “Petros has a top-notch team and we enjoyed working with them to ensure both the historic and sustainable legacy of this building continues into the future.”

This marks Petros’ first C-PACE transaction in New York. Petros has now transacted in thirteen states, including Washington, D.C. The Energy Improvement Corporation serves as the administrator of the City of Syracuse, NY PACE Energy Efficiency Program and Haynor Hoyt Corp. is serving as the general contractor for the project.

 

About Petros PACE Finance

Petros PACE Finance, LLC is the national leader in the C-PACE marketplace, dedicated solely to providing long-term C-PACE financing to commercial property owners seeking to lower energy costs, reduce their carbon footprint and increase property values. Leadership has decades of executive-level experience in commercial lending and structured finance, with direct long-term institutional investor relationships. With billions in committed capital, Petros is able to close transactions in eligible C-PACE markets nationwide. To learn more about Petros PACE Finance visit our website at petros-pace.com/.

Media Contact:
Kylie Fitzpatrick
512-599-9042
kylie@petrospartners.com

Originally published on Cision PR Newswire

Petros PACE Finance Provides $5.6 million in C-PACE Financing for Hotels in Omaha, Nebraska

AUSTIN, Texas, Feb. 19, 2020 /PRNewswire/ — Petros PACE Finance, LLC (petros-pace.com) has closed two Commercial Property Assessed Clean Energy (C-PACE) transactions totaling $5.6 million with MH Hospitality, an Omaha, Nebraska developer, owner and manager of hospitality properties, to finance energy-saving upgrades in the construction of two Omaha hotels.

MH Hospitality secured $2.3 million in C-PACE financing for the recently completed construction of a 102-key Home 2 Suites by Hilton hotel at 4440 Douglas Street near the Nebraska Medical Center, in addition to $3.3 million in C-PACE financing for the construction of a 138-key dual-branded Home 2 Suites / Tru by Hilton hotel at 7011 S Hascall Street near the Creighton University Medical Center.

“Nebraska is one of the fastest growing C-PACE markets, where more and more real estate developers are seeking to combine C-PACE with other forms of financing to efficiently fill their capital stacks,” said Mansoor Ghori, Petros PACE Finance CEO. “We’ve closed multiple deals with MH Hospitality now and look forward to helping more projects deliver environmental and economic returns in the state.”

MH Hospitality will use the funds for sustainable design elements incorporated into the construction of the two properties, including high-efficiency HVAC, walls, roofing, windows, plumbing, and LED lighting.

“C-PACE financing provided private capital to help transform the previously abandoned and underutilized buildings, demonstrating how C-PACE supports cities in their efforts to revitalize urban cores,” said Rob Shear, SVP – New Markets at Petros PACE Finance.

C-PACE is a relatively new financing tool for energy and water efficiency projects that has grown quickly in recent years. As a low-cost, long-term permanent financing product secured as a property tax assessment, it provides developers with an alternative to mezzanine debt and equity that lowers overall capital costs and allows them to invest in higher efficiency building designs.

“C-PACE works well alongside our construction loan and Tax Increment Financing (TIF) to provide stability for our capital stack, in addition to paying for sustainable building features,” said Dan Marak, owner of MH Hospitality. “Petros worked diligently to integrate C-PACE with the other capital sources for an efficient close.  We are glad to have them as a trusted partner.”

With these closings, Petros has now funded eleven C-PACE projects in Nebraska. The City of Omaha serves as the administrator of the Eastern Nebraska Clean Energy Assessment District (ENCEAD) and Dicon Corporation served as the general contractor for the projects.

 

About Petros PACE Finance

Petros PACE Finance, LLC is the national leader in the C-PACE marketplace, dedicated solely to providing long-term C-PACE financing to commercial property owners seeking to lower energy costs, reduce their carbon footprint and increase property values. Leadership has decades of executive-level experience in commercial lending and structured finance, with direct long-term institutional investor relationships. With billions in committed capital, Petros is able to close transactions in eligible C-PACE markets nationwide. To learn more about Petros PACE Finance visit our website at petros-pace.com/.

Contact:
Kylie Fitzpatrick
512-599-9042
kylie@petrospartners.com

Originally published on Cision PR Newswire

Petros Completes its Seventh Privately Rated Securitization of Investment-Grade C-PACE Loans

AUSTIN, Texas, Jan. 30, 2020 /PRNewswire/ — Petros PACE Finance, LLC (petros-pace.com), the national leader in the Commercial Property Assessed Clean Energy (C-PACE) financing marketplace, announced today that it recently completed its seventh privately rated securitization on C-PACE assets from independent credit rating agency DBRS Morningstar.

“These ratings are a testament to the strength of our underwriting platform and the growing importance of C-PACE as an asset class,” said Petros PACE Finance Co-Founder and CFO Jim Stanislaus. “We are pleased with the new rating methodology for PACE assets from DBRS Morningstar. We are planning for continued exponential growth, so having a highly replicable, efficient process for completing these securitizations is critical.”

Petros PACE Finance served as its own placement agent on the assets and as its own structuring agent on the rated transaction with DBRS Morningstar, using T-REX’s software for the structuring and reporting along with a capital call line from ING.

“T-REX is committed to helping innovative firms pioneer complex areas of structured finance like C-PACE,” said Scott Miller, CBDO of T-REX. “We’re excited to help Petros deliver a clearer picture of opportunities for investors in this new market, as more firms incorporate a sustainability focus into their investing strategy.”

The executives at Petros PACE Finance have deep expertise in structured finance and also direct relationships with a diverse mix of institutional investors that enables Petros to structure and complete transactions with the highest levels of efficiency.

 

About Petros PACE Finance

Petros PACE Finance, LLC is the national leader in the C-PACE marketplace, dedicated solely to providing long-term C-PACE financing to commercial property owners seeking to lower energy costs, reduce their carbon footprint and increase property values. Leadership has decades of executive-level experience in commercial lending and structured finance, with direct long-term institutional investor relationships. With billions in committed capital, Petros is able to close transactions in eligible C-PACE markets nationwide. To learn more about Petros PACE Finance visit our website at petros-pace.com/.

 

About T-REX

T-REX has redefined how markets approach complex investments with a turn-key managed data service and SaaS platform for analytics, reporting and collaboration. With T-REX, market practitioners access a complete suite of tools and data to analyze, assess, and accurately price the risk associated with issuing and investing in alternative and private markets including structured credit and project finance. Learn more at www.trexgroup.com.

 

Contact:
Kylie Fitzpatrick
512-599-9042
kylie@petrospartners.com

Originally published on Cision PR Newswire

Petros PACE Finance Expands into Oklahoma Market with $4.9 Million in C-PACE Financing for Two Tulsa Hotels

AUSTIN, Texas, Jan. 30, 2020 /PRNewswire/ — Petros PACE Finance, LLC (petros-pace.com) has closed two Commercial Property Assessed Clean Energy (C-PACE) transactions totaling $4.9 million with Ross Group, a Tulsa, Oklahoma-based commercial real estate owner and developer, to finance energy-saving building measures in the redevelopment of two properties into hotels in downtown Tulsa.

Ross Group secured $3.2 million in C-PACE financing for the recently completed renovation and conversion of the historic Tulsa Club building into a 90-room Hilton Curio hotel, in addition to $1.7 million in C-PACE financing for the construction of the 116-room Holiday Inn Express & Suites – Downtown Tulsa. The deals mark the first C-PACE transactions to close in Oklahoma.

“We are excited to be the first to bring C-PACE to the Oklahoma market as a new, low-cost financing tool that can help improve returns for sustainable development,” said Mansoor Ghori, CEO of Petros PACE Finance. “These two projects demonstrate the role C-PACE can play in efforts to revitalize urban cores and we look forward to working with innovative Oklahoma developers like Ross Group.”

Ross Group will use the funds for sustainable design elements, which were incorporated into the redevelopment of the two properties, including efficient heating, cooling, plumbing and lighting systems, along with building envelope improvements. The Tulsa Club’s 1920s-era building was home to a prominent social club in the city, but sat vacant for years before its recent conversion into a hotel. The site of the Holiday Inn Express Downtown Tulsa was previously occupied by two older commercial buildings.

C-PACE is a relatively new financing tool for energy and water efficiency projects, which has grown quickly in recent years. As a low-cost, long-term permanent financing product secured as a property tax assessment, it provides developers with an alternative to mezzanine debt and equity that lowers overall capital costs and allows them to invest in higher efficiency building designs.

“Ross Group is committed to development practices that improve our community’s infrastructure,” said Warren Ross, Chairman and President of Ross Group. “C-PACE financing is a cost-effective financing tool to include in the capital stack of future developments that promote sustainability and economic development.”

PACE Financial Servicing serves as the interim administrator of the Tulsa County, Oklahoma PACE program. Ross Group Construction Corporation is the owner and developer for the Tulsa Club Hotel – Curio by Hilton and the Holiday Inn Express & Suites – Downtown. Oklahoma marks the sixth state where Petros has closed the first C-PACE transaction and expands the firm’s national footprint to eleven states and Washington, D.C.

About Petros PACE Finance

Petros PACE Finance, LLC is the national leader in the C-PACE marketplace, dedicated solely to providing long-term C-PACE financing to commercial property owners seeking to lower energy costs, reduce their carbon footprint and increase property values. Leadership has decades of executive-level experience in commercial lending and structured finance, with direct long-term institutional investor relationships. With billions in committed capital, Petros is able to close transactions in eligible C-PACE markets nationwide. To learn more about Petros PACE Finance visit our website at petros-pace.com/.

Contact:
Kylie Fitzpatrick
512-599-9042
kylie@petrospartners.com

Originally published on Cision PR Newswire

Petros PACE Provides $4.2 million in C-PACE Financing for Conversion of Historic Logan Building into Boutique Hotel

AUSTIN, Texas, Jan. 29, 2020 /PRNewswire/ — Petros PACE Finance, LLC (petros-pace.com) has closed a $4.2 million Commercial Property Assessed Clean Energy (C-PACE) transaction with REV Development, an owner, developer and operator of hospitality properties, to finance energy-saving upgrades in the conversion of a historic building into a boutique hotel in downtown Omaha, Nebraska.

The transaction will fund a portion of the renovation of Omaha’s century-old Logan Building. The 7-story building will be operated as a 90-key Hotel Indigo, with additional space for condos and ground-level retail that also includes a restaurant and speakeasy. The redevelopment project included energy-saving improvements to the property’s lighting, HVAC, windows, roofing and plumbing systems.

“C-PACE has now become an indispensable development tool for historic rehabilitation projects, as a low-cost, long-term financing option that also promotes sustainability,” said Mansoor Ghori, Petros PACE Finance CEO. “This is our third closing with Mike Works and his team and we are excited to help him bring new life to this piece of Omaha history.”

C-PACE is a relatively new financing tool for energy and water efficiency projects that has grown quickly in recent years. As a low-cost, long-term permanent financing product secured as a property tax assessment, it provides developers with an alternative to mezz and equity that lowers overall capital costs and allows them to invest in higher efficiency building designs.

“For this project, we needed creative financing in order to transform a historic building that’s been vacant for decades,” said Mike Works, Owner of REV Development. “Petros served as an invaluable partner by providing C-PACE financing to boost development and sustainability in this area of downtown and we look forward to continuing to work with them.”

This marks Petros’ ninth funding in Nebraska. The City of Omaha serves as the administrator of the Eastern Nebraska Clean Energy Assessment District and New Generation Construction is serving as the general contractor for the project.

“C-PACE is a natural complement to other forms of public-private funding. Historic Tax Credits along with Tax Increment Financing and designation of the project as a part of an Enhanced Employment Area by the City of Omaha helped make the project a reality,” said Rob Shear, SVP – New Markets for Petros.

Completion of construction is expected by July of 2020.

About Petros PACE Finance

Petros PACE Finance, LLC is the national leader in the C-PACE marketplace, dedicated solely to providing long-term C-PACE financing to commercial property owners seeking to lower energy costs, reduce their carbon footprint and increase property values. Leadership has decades of executive-level experience in commercial lending and structured finance, with direct long-term institutional investor relationships. With billions in committed capital, Petros is able to close transactions in eligible C-PACE markets nationwide. To learn more about Petros PACE Finance visit our website at petros-pace.com.

Contact:
Kylie Fitzpatrick
512-599-9042
kylie@petrospartners.com

Originally published on Cision PR Newswire

C-PACE Alliance Adds Four More Capital Providers as Members

Commercial property owners use C-PACE financing to fund energy efficiency, renewable energy and resiliency measures on new and existing buildings in 21 states and the District of Columbia. With repayment terms up to 30 years and fixed interest rates, C-PACE financing can be an important part of the capital stack for commercial real estate projects. In addition to increasing property value and reducing operating costs, C-PACE projects stimulate local economic activity, create jobs and enhance the quality of the built environment.

“Each of these four companies adds a new perspective that will strengthen CPA’s efforts to make C-PACE financing widely available and easy to use,” said CPA Executive Director Cliff Kellogg.

CPA publishes policy white papers and provides technical assistance to emerging state and local C-PACE programs. White papers are available here. With the addition of these firms, CPA represents firms that have invested in or advised on virtually all C-PACE investment volume nationally.

  • Greenworks Lending is a leading provider of C-PACE financing, having supplied C-PACE capital to hundreds of commercial properties in over a dozen states. Greenworks issued the first publicly rated securitization of C-PACE assets in 2017, receiving a­ AA rating from Morningstar, and the firm issued a second securitization in 2018 that attracted a $440 million investment. Greenworks is led by several of the industry’s founding policy developers.
  • PACE Equity was among the earliest C-PACE capital providers and now operates in nearly every active CPACE market. PACE Equity has expertise utilizing C-PACE in complex and innovative ways, having pioneered the use of C-PACE financing for projects in new construction, Opportunity Zones, Historic Tax Credits, New Markets Tax Credits, brownfield redevelopment and tax increment financing.
  • Dividend Finance is a national provider of residential and commercial renewable energy, energy efficiency and home improvement financing solutions for property owners. A Dividend entity was an early C-PACE provider, launching in 2010 in California and now offering C-PACE in over 20 states.
  • Stonehill Strategic Capital specializes in C-PACE new construction projects, with the ability to deliver a complete debt financing solution of both senior construction loans and permanent C-PACE financing. Stonehill has extensive experience in alternative financing for the hospitality industry.

About C-PACE Alliance
C-PACE Alliance is a coalition of capital providers and transaction experts committed to achieving the public benefits of C-PACE by increasing the volume of quality transactions. CPA members have advised on program design in Pennsylvania, Virginia, New York state and Illinois.

CONTACT
Cliff Kellogg
Phone: 202-744-1984

Originally published on Cision PR Newswire

Petros PACE Finance Hires Commercial Real Estate Executive Scott Moxham as Senior Vice President of Finance & Accounting

AUSTIN, Texas, Dec. 19, 2019 /PRNewswire/ — Petros PACE Finance, (petros-pace.com), the leading provider of Commercial Property Assessed Clean Energy (C-PACE) financing, announced today the hiring of Scott Moxham as Senior Vice President – Finance & Accounting. At Petros, Moxham will oversee accounting and financial operations along with key strategic initiatives to accommodate the firm’s growth.

“Scott played a formative role in the launch of Petros PACE Finance, creating the first model for our PACE product,” said Jim Stanislaus, CFO and Co-founder at Petros PACE Finance. “He is critical addition to the team as we anticipate continued growth in origination and we are pleased to welcome him back.”

Moxham’s career spans more than 20 years of varied experience in structured finance, tax credit monetization, and investment management, with extensive experience in commercial real estate and fixed income securities.

He joins Petros from a position as Chief Financial Officer at Capella Capital Partners, an Austin-based commercial real estate development firm with an asset portfolio spanning office, retail, multi-family, storage and raw land.

“I’ve enjoyed working with leadership team at Petros and am excited to return to the impressive business they’ve built,” said Moxham. “We’ve just scratched the surface of the market opportunity for this quickly growing area of sustainable finance and I look forward to helping the firm continue building the C-PACE marketplace.”

In a previous stint at Petros, Moxham was responsible for key aspects of structuring, modeling and underwriting for the firm’s tax credit-based investments. As a founding employee of the firm, he played a critical role in launch of Petros PACE Finance. He also previously held senior-level accounting positions with PricewaterhouseCoopers and KPMG.

Moxham earned a Bachelor’s of Business Administration from Texas Christian University and an MBA from The University of Texas at Austin. Additionally, he is a CFA charterholder and a CPA licensed in the state of Texas.

About Petros PACE Finance
Petros PACE Finance, LLC is the national leader in the C-PACE marketplace, dedicated solely to providing long-term C-PACE financing to commercial property owners seeking to lower energy costs, reduce their carbon footprint and increase property values. Leadership has decades of executive-level experience in commercial lending and structured finance, with direct long-term institutional investor relationships. With billions in committed capital, Petros is able to close transactions in eligible C-PACE markets nationwide. To learn more about Petros PACE Finance visit our website at petros-pace.com.

CONTACT 
Kylie Fitzpatrick
Phone: 512-599-9042

Originally published on Cision PR Newswire

Major U.S. States, Counties and Cities Embrace a New Tool to Pay for Energy Efficiency

WASHINGTON, Dec. 11, 2019 /PRNewswire/ — The year 2019 marked an extraordinary milestone for Commercial Property Assessed Clean Energy (C-PACE) financing, as the nation’s largest East Coast and Midwest markets embraced the new financing tool for making property upgrades that improve energy efficiency.

Today, the C-PACE Alliance industry coalition spotlighted the new programs authorized in New York, Illinois, Pennsylvania, Virginia and Massachusetts.  In the last quarter, C-PACE transactions closed in New York State, in Chicago, and in DuPage and Kane Counties with financing from Inland Green Capital and Counterpointe, both members of the C-PACE Alliance.

C-PACE is an alternative financing mechanism for property upgrades that improve energy efficiency, utilize renewable energy, conserve water and more.  C-PACE enables owners of commercial, industrial, multifamily, and nonprofit properties to obtain low-cost, long-term, fixed-rate financing from private capital providers.

According to the U.S. Department of Energy, commercial buildings constitute almost 1/5 of the nation’s primary energy consumption.

“In the discussion over how to reduce greenhouse gas emissions, it’s easy to overlook the fact that commercial property owners must bear the construction cost of these higher building performance standards,” said Cliff Kellogg of the C-PACE Alliance. “Commercial PACE financing eases that cost burden without any government funding.”

In addition to the states that adopted or updated C-PACE statutes, city councils adopted C-PACE in New York City, Chicago and Philadelphia.  County supervisors adopted C-PACE in DuPage and Kane County, IL; Fairfax and Loudoun County, VA; Allegheny (Pittsburgh), Chester, Lawrence, Northampton, and Wayne County, PA; New Castle County (Wilmington), DE; and in Bernalillo (Albuquerque) County, NM.

C-PACE Alliance is a coalition of capital providers and transaction experts committed to achieving the public benefits of C-PACE by increasing the volume of quality C-PACE transactions. C-PACE Alliance members have advised on program design in Pennsylvania, Virginia, and New York State.  C-PACE Alliance supports the broader industry-building efforts of PACE Nation.

 

CONTACT 
Cliff Kellogg
Phone: 202-744-1984

Originally published on Cision PR Newswire

Petros PACE Finance Provides $11 million in C-PACE Financing for Conversion of Historic Southern California Property into Boutique Hotel

AUSTIN, Texas, Nov. 25, 2019 /PRNewswire/ — Petros PACE Finance, LLC (petros-pace.com) Petros PACE Finance has closed an $11 million C-PACE transaction with WestPac, a Santa Barbara-based investment, development and management firm, to finance seismic upgrades for the Hotel Cerro, a historic gut rehab project in downtown San Luis Obispo, California.

WestPac will use the funds for a seismic retrofit to an early 20th-century property as part its conversion into a five-story, 65-room boutique luxury hotel. The hotel will include the largest spa and the first rooftop pool and bar in downtown San Luis Obispo, along with dining and event spaces, a distillery, and rooftop garden. Located in the heart of the coastal city, the hotel will cater to visitors of the popular tourist destination, including wine country guests, parents of Cal Poly SLO students, wedding and business groups.

“Creative financing solutions are needed to breathe new life into historic properties like this, because they often require costly upgrades to the building’s original infrastructure,” said Mansoor Ghori, Petros PACE Finance CEO & Co-Founder. “C-PACE financing from Petros is providing WestPac with a lower-cost alternative to traditional financing for seismic upgrades on a stylish, contemporary hotel that will attract more visitors to downtown San Luis Obispo.”

C-PACE is a relatively new financing tool for energy and water efficiency projects that has grown quickly in recent years. A low-cost, long-term financing product secured as a property tax assessment, it solves many problems that have historically prevented commercial building owners from investing in energy efficiency or renewable energy, such as high upfront costs. Additionally, California property owners can use C-PACE for seismic upgrades to more cost effectively reinforce their buildings.

“WestPac is committed to the sustainable development of distinctive properties,” said Patrick Smith, Partner at WestPac Investments. “We’ve closed three deals with Petros now and they’ve become an extremely valuable partner in helping us pursue our vision of sustainable development. Petros brings both low-cost capital and an expert team with the ability to understand complex transactions and get the job done.”

Petros closed the transaction through the Western Riverside Council of Governments (WRCOG) PACE Program. Specialty Construction served as the general contractor for the project.

The hotel is expected to be open to guests by the end of the year.

 

About Petros PACE Finance

Petros PACE Finance, LLC is the national leader in the C-PACE marketplace, dedicated solely to providing long-term C-PACE financing to commercial property owners seeking to lower energy costs, reduce their carbon footprint and increase property values. Leadership has decades of executive-level experience in commercial lending and structured finance, with direct long-term institutional investor relationships. With billions in committed capital, Petros is able to close transactions in eligible C-PACE markets nationwide. To learn more about Petros PACE Finance visit our website at petros-pace.com.

 

CONTACT 
Kylie Fitzpatrick
Phone: 512-599-9042

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Originally published on Cision PR Newswire