C-PACE Industry-leader CleanFund is first to tap the 144A securitization market to issue AAA-rated notes backed exclusively by Commercial Property Assessed Clean Energy (C-PACE) tax assessments
SAN FRANCISCO, CA (July 31, 2018) — CleanFund, the leading nationwide provider of Commercial Property Assessed Clean Energy (C-PACE) financing, announced today the closing of the industry’s first securitization backed exclusively by C-PACE property assessments issued pursuant to rule 144A under the Securities Act of 1933 – and the largest and highest-rated C-PACE securitization of any kind. A single $103 million, AAA-rated note was issued in connection with the transaction. Credit Suisse served as the exclusive advisor and structuring agent for the transaction. The securities are backed by $115 million of C-PACE assessments on 82 properties in six states in the West Coast, Midwest and East Coast.
“This first 144A securitization for C-PACE is a significant moment for the industry. As a pioneer of the C-PACE industry, CleanFund has demonstrated its vision to help reduce the environmental impact of commercial properties through structured finance,” said CleanFund CEO Greg Saunders. “Tapping the public markets should open the door for follow-on transactions that bring more investors to our industry and provide our customers even more competitive and robust financing options for office, retail, industrial, multi-family and other commercial property.”
Peter Morgan, Partner at Winston Strawn LLP, noted: “It was an honor to assist CleanFund with the first 144A offering of C-PACE asset-backed securities. I’ve worked with many ABS issuers over time, and have been impressed with the CleanFund team and the origination platform they’ve built. First-time deals can take a bit more work, but in this case, CleanFund’s preparedness and professionalism made a big difference.”
Since its founding in 2009, CleanFund has systematically built its capabilities for the C-PACE capital markets. It has accomplished this by structuring the first privately-financed commercial PACE transaction in 2011, then executing the first unrated C-PACE securitization in 2014, and today closing the first 144A C-PACE securitization. Key to CleanFund’s success from the beginning – in addition to building the largest and most experienced C-PACE team – has been significant investment in best-in-class technology and underwriting standards that fully support secondary market execution.
C-PACE financing was introduced in California in 2008 as a form of voluntary parcel tax assessment financing to fund qualifying improvements that reduce energy and water usage, and that provide seismic and other resiliency benefits to the built environment. C-PACE financing for commercial real estate, which has been adopted in 34 states and the District of Columbia, allows property owners to repay qualified investments for building upgrades and new construction as a line item on the property’s ordinary property tax bills. Unlike residential PACE financing on single-family homes, mortgage lenders on prospective C-PACE properties provide approval of each transaction.
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