Ygrene Energy Fund Closes $184 Million Securitization Achieving Industry’s First Ever AAA-rated PACE Bonds
In tandem with the close of a $145 million private securitization, Ygrene Energy Fund, Inc., the leading national provider of residential, multifamily and commercial Property Assessed Clean Energy (PACE) financing, recently announced a $184 million public securitization with the industry’s first AAA rated PACE assets. Designated Green Bond-1 by Moody’s Investor Services, the deal included $179.482 million in class A notes and $4.995 million in class B notes, with the A and B notes rated AAA and A by Morningstar and AA and BBB by Kroll, respectively. The collateral pool was comprised of residential and commercial assets from over 6,000 California properties and over 1,500 Florida properties, demonstrating the first public securitization to encompass multiple states as well as property types.
“We saw exceptional demand for this deal, with both A and B notes being oversubscribed,” said Rasool Alizadeh, Ygrene’s Senior Director of Capital Markets & Asset Backed Securities. “The diversity of our product offering and geographies helped attract a broad range of investors that we look forward to working with as we expand this asset class.” The two-tranche deal, Ygrene’s first public securitization and third overall, achieved a noteworthy 99.7% advance rate, adding to Ygrene’s capital liquidity as the company plans to launch in at least two new states next year. The ABS was structured in conjunction with Deutsche Bank Securities, Inc. and syndicated out to a broad group of investors comprised of asset managers and large insurance companies.
“PACE has gained critical traction over the past few years, and we’re pleased to work with industry leaders like Ygrene to advance this valuable asset class,” said Kevin Tanzer, Managing Director at Deutsche Bank. “Achieving the first AAA rating speaks to Ygrene’s novel product offering, and the propitious future of PACE assets,” said Michael Chan, CFO of Ygrene Energy Fund. “The structure of this deal can serve as a model for the PACE industry as it matures.”
Approved by local municipalities, Ygrene provides 100% financing for property owners to deploy energy efficiency, renewable energy, water conservation and climate resiliency upgrades to their buildings through their award winning YgreneWorksTM PACE program. This securitization will fund approximately 7,500 energy and water conservation projects, providing home and business owners with over $360 million in estimated savings on energy and water bills, and eliminating over 216K metric tons of CO2 from the atmosphere.
“This deal is not just an industry first, but an important achievement for all the communities PACE serves,” said Stacey Lawson, CEO of Ygrene Energy Fund. “As we expand the YgreneWorks program to meet mounting market demand, we’re pleased to help bring down financial barriers, and provide an affordable solution that benefits all homeowners.”