Petros PACE Finance Year in Review

This was a big year for Petros and the C-PACE industry. As the year comes to a close, I’d like to reflect on the progress we’ve made and what’s next for us. I’d also like to express my gratitude for the hard work that’s made it possible.

 

We are now at an inflection point where the stage is set for exponential growth.

C-PACE passed $1 billion loan volume this year. At Petros, we’re seeing growth in the size of PACE projects and more developers and property owners seeking us out. Our deal pipeline has more than tripled in size over last year.

Petros provided $8 million in C-PACE financing for the ground-up development of the KC Hyatt House in Kansas City, Missouri.

This year, we closed projects introducing C-PACE to new markets. We marked a milestone with Ohio’s first Opportunity Zone project to include C-PACE financing. We closed deals with repeat customers. Ground-up development projects increasingly drove growth, while original staples of the PACE industry like rehab projects remained strong.

We expect this growth to continue. New markets establishing PACE programs will only continue the rapid growth of the C-PACE market, as sustainability and energy efficiency increasingly become must-have building features. With lending standards tightening and foreign investment in flux, sponsors and operators will also be looking to C-PACE as an alternative source of financing in the capital stack.

 

As origination volume has grown, so has our team.

Strategic additions to our senior leadership team will enable us to expand the reach of C-PACE more broadly into diverse types of projects and markets.

 

 

We hired PACE industry veteran Andy Meyer as Senior Vice President to help continue to scale our business.  Michael Wallander joined as SVP of Solar Financing to run Petros Energy Solutions as part of our acquisition of his solar financing company Demeter Power Group, Inc. Our solar lease product will be launching soon.

We also have had many other new hires that strengthened our origination, underwriting and transaction teams, improving our ability to quickly close complex transactions and to seamlessly integrate PACE with other types of financing such as Historic Tax Credits, New Market Tax Credits and Tax Increment Financing.

 

We’ve built out an efficient platform for securitization to fuel growth and deliver returns for investors.

We’ve now developed a systematic process with our partners at T-REX, ING, DBRS Morningstar, and Wilmington Trust to efficiently complete securitizations, closing our sixth and seventh privately rated securitizations this year. Nailing down this process is critical to accommodate the exponential growth in origination we anticipate. We also expect demand for asset classes like C-PACE to continue to grow, as more firms seek to incorporate sustainability into their investment strategy.

 

The industry is taking note of C-PACE’s attractive financing features and benefit as a tool for promoting economic development and sustainability.

The New York Times highlighted the Capitol District mixed-use project that Petros financed in an article about the growth of C-PACE.

C-PACE attracted increasing attention this year. The New York Times highlighted the growth of C-PACE as a tool for developers to go green and lower their cost of capital in an article that featured Petros and the Omaha Capitol District project we financed.

NYC’s Climate Mobilization Act put a spotlight on C-PACE as a way to reduce the financial burden of complying with green building codes that more cities and states are enacting – without dipping into public coffers.  A July Morningstar report forecast huge growth for the C-PACE market driven by NYC.

A report published by Berkeley National Laboratory in June found remote risk of nonpayment for C-PACE loans.

 

Petros remains committed to education efforts to steer the C-PACE industry through this exciting time.

Education remains crucial to building the C-PACE marketplace and members of our executive and senior leadership team traveled across the country this year to attend and speak at events furthering the conversation about C-PACE.

Petros was proud to serve as Summit Event Sponsor for this year’s PACENation Summit, hosted here in Austin. We look forward to the next PACENation Summit in Columbus, Ohio. We also became a national sponsor of the Council for Development Finance Agencies (CDFA) this year.

The C-PACE Alliance continues to serve as a critical resource for local governments designing C-PACE programs, releasing five white papers this year promoting industry best practices.

CFO & Co-founder Jim Stanislaus and SVP – Sales Rachel Davis spoke at the 2019 PACENation Summit.

 

Lastly, I want to thank all of our partners. It takes a lot of talented people working hard to close these complex transactions, as we build a new marketplace.

We’ve assembled an all-star team at Petros who have worked hard to bring in and close some big deals this year. We’ve also been fortunate to work with savvy property owners and developers, government officials, and other industry partners to close projects that help promote PACE as an increasingly necessary part of the financing toolkit for smart development.

And we also have a Board of Directors who’ve continued to open doors and provide invaluable guidance as we expand our business and pursue strategic partnerships.

I’m very proud of what we’re building together and look forward to seeing what we accomplish as a company and an industry in the next year.

Mansoor Ghori

CEO, Petros PACE Finance