Had a group come in an pitch us yesterday about using a PACE loan as the Mezz debt on a ground up deal. The loan sits on the tax role instead of the title. The rate they were quoting was 7% vs the 14% mezz rates. The loan term is also based on the useful life of the clean energy items that are added. They will lend up to 85% of LTC.... wanted to see if anyone has seen anything like this?
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No, but please PM me. I'm very interested in using it on a few projects that I am Involved with.
Also interested, please PM me
Which group? Would like to study further. Just read about PACE and it is intriguing. Curious just how green projects need to be to qualify.
We are working on two deals right now with PACE loans. Both are for retrofits of older buildings vs. ground up. Typically, we don't allow secondary financing behind us, but as you noted it is essentially a tax lien vs. a true secondary financing. Because the payments are just added to the taxes, we are simply increasing our tax/insurance escrow by the same amount to ensure it gets paid.
This seems structurally identical to a PID...not the case? I know PIDs are also stacked on the tax assessment vs on title, but I with PIDs I believe the financier overseeing the PID payments can foreclose if you default on the PID assessment due. Would love to know the difference.
My legal has advised that PACE loans aren't forecloseable by the financing entity. In theory, the tax authority can sell the tax lien and the buyer could foreclose, but the entity doing the financing can't directly foreclose.
As a senior lender, we don’t look favorably to PACE loans because we don’t want any other piece of paper ahead of us.
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