Nuveen Green Capital is sponsoring its latest commercial property assessed clean energy (PACE) transaction, a deal that will raise some $149.8 million through the PACEWELL 6 trust, and expected to close in mid-November.
Nuveen Green Capital is a pioneer in PACE financing, which uses special tax assessments to repay financing for energy efficiency, retrofit and upgrade projects on commercial real estate properties. Aside from Nuveen Green Capital, several other companies originated the loans in the collateral pool, including CleanFund Commercial PACE Capital, CastleGreen Finance and Counterpointe Sustainable Real Estate, according to a pre-sale report from Morningstar | DBRS.
For its part, Nuveen Green Capital sources loans through some its relationships among about 200 contractors and channel partners, DBRS said. The company maintains those business ties through regionally based origination operations, in a business that is still fragmented and hyper-local.
It also leaves site inspections to third-party engineers, contractors or town inspection officers in connection with the permitting process.
As for PACEWELL, the trust will issue one class of certificates, and DBRS expects to assign a 'AAA' rating to it. Without subordination, overcollateralization, a liquidity reserve account, and an Interest Supplement Account provide initial credit enhancement, DBRS said.
The liquidity reserve account is funded at a level of at least 3.60% of the aggregate PACE portfolio balance, and is subject to a floor of $5.3 million at closing. The trust can use this reserve account to cover fees and expenses and interest shortfalls for Class A notes after remittance amounts are exhausted, the rating agency said.
The pool consists of 35 loans, for which Nuveen Green Capital accounts for $80.9 million, equaling about 74.2% of the PACE assets, DBRS said.
As for property types in the pool, the multifamily segment accounts for the largest portion of the pool balance, at 39.04% with a balance of $58.5 million, followed by lodging, at 26.7%, with $40 million in assets.
Geographically, a majority of PACEWELL's pool assets, 55.8%, are connected to assets in California and New York, breaking down to 31.9% and 23.9%, respectively. Ohio, Delaware and Maryland round out the top five states, accounting for 9.34%, 7.15%, and 5.37%, respectively.
