By Jeffrey Steele
Multi-Housing News | Feb. 28, 2019



Another option that continues to rise in popularity is property assessed clean energy financing (C-PACE), which enables a sponsor to repay a loan through a property tax assessment. In a milestone, last summer CleanFund structured the first public securitization of C-PACE-backed assets. At $103 million, it was the largest and highest-rated such securitization to date. It involved a AAA-rated note for a transaction covering 82 multifamily, office and other commercial properties across six states. The landmark transaction demonstrates the increasing acceptance of the funding mechanism by both Wall Street and asset owners, contends Woolsey McKernon, senior vice president of CleanFund.



That said, the strategy is not without limitations. Availability varies by state, and  loans are categorized as tax liens, placing them senior to existing mortgages. Borrowers must gain approval from their lenders before taking them on. And, as Sturm noted, “Fannie and Freddie have also both refused to purchase loans with PACE liens on them, hampering their viability,” Sturm added.

Notwithstanding those hurdles, proponents maintain that C-PACE is an attractive source of capital.

Educating and informing the market is an ongoing effort,” McKernon said, “but apartment and commercial property owners are increasingly finding C-PACE to be a superior long-term option for major upgrades in mechanical, electrical, plumbing and structural components such as solar, HVAC windows, roofing, insulation, water systems and seismic strengthening.


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