Greenworks Prepares $ 173.2 Million Securitization 144a PACE

Greenworks Lending LLC sponsors $ 173.2 million in Asset-Backed Securities, Backed by Repayment of Clean Energy Assets Valued by Commercial Properties (PACE). The agreement, PACEWELL 5, LLC, will be Greenworks Lending’s first 144a issue of PACE assets.

Closing on December 16, the collateral pool for the transaction consists of $ 116.1 million of commercial PACE and up to 49.7 million PACE of assets to be acquired after closing.

PACEWELL also includes a pre-finance account equal to approximately 30% of the projected portfolio balance and meets the criteria set out in the terms of the transaction, according to DBRS Morningstar.

PACE bonds are redeemed through local tax assessments on properties that borrow from banks to finance renovations aimed at reducing carbon emissions.

Greenworks, based in Darien, Connecticut, was the first to securitize PACE’s assets when it struck a $ 75 million deal in 2017, working with Guggenheim Securities.

TIAA was the primary investor in the notes issued in 2017, and Nuveen, TIAA’s global investment manager, acquired Greenworks in April 2021.

Three categories of notes make up the capital structure of the transaction. The oldest note, Class A, will issue $ 160.4 million in notes, and DBRS is expected to give them “AAA” ratings. The rating agency also plans to assign “AA” and “BBB” ratings to the following classes.

On any Semi-Annual Payment Date, the Notes will be prorated if a Loss Triggering Event is in effect. If a Loss Triggering Event exists, the Trust will repay the Notes on a sequential basis.

PACEWELL 5 bonds benefit from several levels of credit enhancement, including an initial credit enhancement in the form of subordination, a liquidity reserve account and an interest supplement account, DBRS said.

The liquidity reserve account is funded at 1% of the overall balance of the PACE portfolio. This mechanism is subject to a floor of $ 1.1 million at closing and can be used to cover fees and expenses, as well as missing interest on Class A, B and C notes once the paid amounts have been used up. The reserve account is replenished on the 10th day of each month of April and October, designated as semi-annual repayment dates.

The portfolio consists of 42 loans, which funded an average of $ 2.7 million. On a weighted average basis, the borrowing rate is 5.5% and the loan-to-value ratio is 19.8%.

The pool of guarantees is diversified, with multi-family properties representing 36% of the pool; accommodation monitoring, 20.3%; various non-CMBS assets, 18%; then industrial properties, 9.1%; and esoteric commercial real estate assets, 7.8%.

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