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September 20th, 2024

Carlyle and North Bridge Announce Strategic Partnership to Provide Up to $1 Billion in C-PACE Financing

NEW YORK, NY – Carlyle, a global investment powerhouse, has just made waves in the real estate finance world with a strategic partnership aimed at reshaping the clean energy landscape. The firm has committed up to a staggering $1 billion to North Bridge ESG LLC, a leading provider of commercial property assessed clean energy (C-PACE) financing. This move sets the stage for an unprecedented expansion in the C-PACE market, giving institutional real estate investors access to a powerful, fixed-rate financing solution that’s fast becoming a critical part of modern capital stacks.

North Bridge provides C-PACE financing to institutional borrowers in major markets nationwide. C-PACE is a fixed-rate form of financing secured by local property assessments. As a private credit solution with flexible terms, C-PACE is increasingly sought after for its accretive benefits to commercial real estate capital stacks. The financing can be used for new construction projects, renovations, acquisitions, and retroactively for recapitalization opportunities. 

“Carlyle’s $1B commitment to C-PACE, the largest to date, enables North Bridge to lead the transformation of the industry to better meet the needs of institutional sponsors and their lenders.” said Laura Rapaport, Founder and CEO of North Bridge. “We are excited to partner with Carlyle, an established leader in the private credit space, given their exceptional track record of partnering with companies to drive growth.”

"We are pleased to bring together Carlyle's significant expertise in asset backed finance and real estate credit to help commercial real estate owners address their financing needs," said Akhil Bansal, Head of Credit Strategic Solutions at Carlyle. "North Bridge has a proven capability to deliver C-PACE financing solutions of substantial size to borrowers and sponsors, and we are excited to partner with them to drive growth in an increasingly important financing market."

“Our partnership with North Bridge, a leader in providing capital market solutions to commercial real estate owners, allows us to further meet the financing demands facing the industry,” said Rachel King, a principal focused on opportunistic real estate credit at Carlyle. “Banks have pulled back from commercial real estate lending due to concentration risk in the sector, resulting in a dynamic that we believe should yield attractive relative value opportunities for C-PACE lenders with capital to deploy today.”

Read more here.

$40M C-PACE Loan Funds Data Center Development At Former Compaq Campus

Lone Star PACE and Nuveen Green Capital secured the commercial property assessed clean energy financing for the first phase of VivaVerse Solutions’ “deep retrofit” of a 774K SF facility at 11445 Compaq Center W. Drive, according to a news release. The building is part of the 66-acre campus at State Highway 249 and Louetta Road that was rebranded as Viva Center earlier this year. 

C-PACE financing has risen in popularity as banks have pulled back from lending, leaving a sizable gap in the capital stack for new construction and renovation projects, Lone Star PACE President Lee McCormick told Bisnow.

“It’s great long-term, low-cost financing for a project that helps debt service coverage ratios, that helps cash flow,” McCormick said. 

The financing incentivizes developers to make efficiency and water upgrades to their properties, making it a win-win, he said. The funding at Viva Center will be used to install energy-efficient windows, LED lighting, advanced HVAC systems and high-efficiency plumbing upgrades for the first phase of the data center, the release states.

Read more here.

Barings and Counterpointe Provide $315.5 Million in Construction Financing for Mixed-Use Development in Los Angeles

Barings, one of the world’s largest diversified real estate investment managers, announced today that it has provided a $160 million construction loan alongside $155.5 million in C-PACE financing from a subsidiary of Counterpointe Sustainable Advisors (“Counterpointe”) for the development of Habitat, a live-work-thrive campus in Los Angeles with creative office, luxury residential, retail, and an integrated park.

“We are thrilled to deepen our partnership with Lendlease on this exceptional development, leveraging our in-house expertise in construction lending alongside Counterpointe’s established C-PACE program to offer a customized capital solution,” said Justin Preftakes, Head of Construction Lending at Barings. “We see significant opportunity in construction lending given the pullback from more traditional sources of capital, combined with high barriers to entry, and we’re excited to be able to execute on this type of complex transformational project.”

The $160 million senior loan provided by Barings has a five-year term and the $155.5 million C-PACE financing from Counterpointe has a 30-year term. This transaction marks the third project in which Barings and Counterpointe have partnered to provide creative construction financing with a lower blended cost of capital.

“The Habitat financing, provided by the partnership of Counterpointe and Barings, offers sustainable debt capital for an exceptional Lendlease development. Our integrated offering of C-PACE and construction mortgage full stack financing encourages borrowers to construct green buildings and finance sustainable projects with competitive rates, efficient process, and certainty of execution,” said Eric Alini, Chief Executive Officer of Counterpointe. “We are proud to partner with Lendlease to help move this exciting project forward while creating sustainable investments for investors.”

Read more here.

WATCH: Unlocking the Benefits of C-PACE Financing for Hotel Developers with Jared Schlosser of Peachtree

✅ ICYMI: NYC C-PACE is Live

Key Takeaways for NYC’s C-PACE Program Guidelines

TL;DR

1. C-PACE loans are capped at 30% of the total construction costs, excluding land or property acquisition costs.

2. There is no required Savings-to-Investment (SIR) ratio for projects involving new construction or comprehensive rehabilitation.

3. The loan term under C-PACE financing has no specified limit.

4. Projects must qualify as "Low Carbon Buildings" (further defined below) designed to emit no more than 25 kg of CO2 per million BTU.

5. All installed devices must adhere to the specified carbon emission limit, except those not connected to the building's gas or fuel oil systems, those used for manufacturing or commercial kitchen operations, or those providing emergency or standby power.

Eligible Costs for PACE Financing PACE loans can fund various improvements but are strictly limited to eligible costs. These include energy-efficient improvements, energy audits, feasibility studies, and related soft costs. It's important to note that these expenses are capped at 30% of the total project costs. This ensures that PACE financing is used specifically for energy-related enhancements that align with the program's goals.

Low-Carbon Building Requirement: Projects involving major renovations or new construction must adhere to low-carbon building standards to qualify for PACE financing. This requirement minimizes the building's emissions, supporting broader environmental goals.

What Defines a Low Carbon Building? A low-carbon building is one that is engineered and operated to minimize emissions. Specifically, any device, machinery, or system installed in the building must not emit more than 25 kilograms of carbon dioxide per million British thermal units (BTU) of energy. The United States Energy Information Administration established this standard. However, there are essential exclusions to this definition, including:

1. Devices not connected to the building’s gas or fuel oil systems, used intermittently, or not for heating or hot water supply.

2. Buildings emitting more than the specified carbon dioxide limit due to necessary activities such as manufacturing, laboratory operations, hospital functions, crematoriums, or commercial kitchens.

3. Excessing the emission limit is necessary when providing emergency or standby power or other uses permitted by specific rules from the Department of Buildings.

Understanding these requirements is essential for developers and property owners leveraging PACE financing. By adhering to these standards, projects can secure the necessary funding while contributing to a more sustainable future.

More information 👇

1. NYC C-PACE: One-Pager 

2. NYC C-PACE: Program Guidelines

Want to learn more about C-PACE? Get started with the articles below:

• What You Need To Know About C-PACE

• Step-By-Step Guide

• History of C-PACE

• Policy & Legislative Framework

• Eligibility of C-PACE

Have a story we missed? Drop us a note → [email protected]

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August read: Columbia Pacific & Nuveen Green Capital Lend $48M Full Stack for Townhome Project

July read: C-PACE Alert: Dwight Capital Launches C-PACE Lending Platform

June read: 4 big stories this week in C-PACE

About C-PACE.COM

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C-PACE.COM was founded by investment professionals with meaningful experience in real estate investment banking, private credit, private equity, and development. Through C-PACE Financing, we seek to reduce the carbon footprint created by commercial real estate and generate superior risk-adjusted returns for our clients.

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Cheers,
Jonathan Seabolt
Founder & CEO
C-PACE.COM