By Allison Bisbey
Asset Securitization Report | Dec. 3, 2018
CleanFund is looking at a new way of getting banks and other lenders comfortable with Property Assessed Clean Energy for commercial buildings; instead of taking a backseat to a PACE lien, they may want to put some of their own money to work financing energy and water efficiency upgrades.
But there are still a number of lenders, particularly banks, who either aren’t familiar with PACE or still aren’t comfortable with it. So CleanFund, one of the most prolific commercial PACE providers to date, has created a debt capital markets division to build relationships with mortgage lenders who are interested in extending their traditional lending alongside commercial PACE lending. It is led by Matt Mustaro, who previously headed credit administration at the firm and also chairs the lender consent committee at PACENation, an industry trade group.
“Just as some banks are not comfortable with ground leases or non-recourse commercial mortgages, certain banks have different credit parameters pertaining to PACE, while others want to be educated about it,” Mustaro said.
There is also some interest on the part of banks, as well as issuers of commercial real estate collateralized loan obligations, to invest alongside CleanFund, helping to fund the PACE financing itself, as a way to learn more about the asset. “We have a group of lenders we are building a relationship with and we send them deals to review. Some lenders, as part of looking at C-PACE, are interested in putting money to work in this financing as well,” Mustaro said. “If you think about developing lending relationships, this is going to drive their business to the next level.”