PACE Financing

Question

Anyone have a good understanding of PACE financing, just starting to trickle into my area, and from quick glance looks like cheaper Mezz. Can anyone give me the positives or pitfalls on it?

First_Lien_Lending · Accepted Answer

The PACE market has matured significantly since this was initially posted. Senior lenders are warming up to PACE for a few reasons: i) PACE loans cannot be accelerated - meaning at no point can the loan be called. You're max exposure is what is due that year; ii) there's flexibility in the PACE structure to make it more attractive i.e. capitalizing interest through construction, fully funding into the same title company as Senior (proof of funds). and; iii) for NNN retrofit projects, it's a home run.

Markertmaker · Answer

"First_Lien_Lending"
The PACE market has matured significantly since this was initially posted. Senior lenders are warming up to PACE for a few reasons: i) PACE loans cannot be accelerated - meaning at no point can the loan be called. You're max exposure is what is due that year; ii) there's flexibility in the PACE structure to make it more attractive i.e. capitalizing interest through construction, fully funding into the same title company as Senior (proof of funds). and; iii) for NNN retrofit projects, it's a home run.

emceedrive · Answer

Maineiac42 hit the nail on the head with his last point.

Senior lenders don't want to be subordinate to anything; having PACE financing attached to your deal means you're almost certainly going to get hit on spread and probably on leverage as well.

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PACE Financing

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PACE Financing

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