GoodGreen is preparing to issue $126.7 million in securitized bonds, secured by revenue from voluntary property tax assessments on commercial and residential properties, in what appears to be the first property assessed clean energy (PACE) deal of the year.
Kawa Capital Management is sponsoring the 144a transaction, which it completed with Ygrene Energy Fund, the program administrator, according to DBRS Morningstar. Some 2,950 in PACE assessments issued in 18 Florida counties and six California counties are in the collateral pool. Miami-Dade accounts for the largest locale of assessments, representing 34.84% of the initial PACE assessments balance, according to the rating agency.
Proceeds PACE assessments finance energy efficiency upgrades to residential and commercial buildings. The assessments pay annually in Florida and semiannually in California, DBRS said.
According to GoodGreen's capital structure, the deal will issue notes through three tranches of classes A, B and C notes, which get AAA, AA and BBB ratings, respectively, from DBRS. The AAA notes benefit from a credit enhancement level of 5.22%, while the AA and BBB tranches both benefit from levels of 2.22%.
GoodGreen 2024-1's notes benefit from an initial reserve target set at 3.00% of the outstanding PACE assessment balance and subject to a floor of $750,000, the rating agency said. After July 2030, the target will step down to 2.00% of the outstanding balance, with a floor of $500,000.
As of the deal's January 30 cutoff date, the collateral pool had some 2,950 assessments. They have an average balance of $31,363, with balances ranging from $3,590 to $357,577, said DBRS. On a weighted average (WA) basis, the collateral pool assets have a rate of 7.95%, an original term of 26.39 years; an assessment loan-to-value ratio of 6.26%, and a mortgage LTV of 44.50%.
U.S. Bank Trust is on the deal as a note trustee, while Zions Bancorporation is the bond trustee for Florida and California escrow agent. In Florida the Green Corridor Property Assessment Clean Energy District is the governmental authority and PACE bond issuer, while the Golden State Finance Authority fills that role in California.
