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GreenRock arranges largest-ever C-PACE financing

The $103 million financing will spur about $40 million of cashflow savings over the next 10 years.

GreenRock Capital, a Larkspur, California-based advisory company that specializes Commercial Property Assessed Clean Energy, has arranged the largest-ever C-PACE financing through a $103 million transaction for a San Francisco hospital.

The financing comes as C-PACE is gaining more traction with commercial real estate investors, who see the program as a way to improve the sustainability and resiliency of their properties, Joe Euphrat, managing principal, told Real Estate Capital USA.

“It’s been very interesting to see the growth of the commercial PACE market. It seems like yesterday when it was only available in three states, no one had ever heard about it and if they did, they thought it was just for solar rooftops,” Euphrat said. “Fast forward, it’s a much larger industry and there is more awareness from borrowers, political constituents, lenders and other participants in commercial real estate.”

C-PACE, a lending program available in 36 states, is designed to encourage property owners to make their buildings more energy or water efficient, improve the use of renewable energy, and increase resiliency. Unlike traditional loans, C-PACE financings are paid back at the same time as a borrower’s property taxes, and the loan is attached to the building even after it is sold.

Over the past few years, more states and cities have adopted PACE programs, with New York City standing out as one of the new jurisdictions that came online in 2021. On the strength of this growth, Euphrat and his partner Chris Robbins launched GreenRock Capital to arrange C-PACE financing for commercial and healthcare. The company operates nationally in the states where PACE is available.

The transaction for Chinese Hospital in San Francisco involved refinancing existing PACE debt on the property’s 2016 vintage Patient Tower. The eight-story building at 845 Jackson Street opened in September 2016 with 54 beds and a 22-bed skilled nursing facility.

The two-tranche offering includes both taxable and non-taxable components and reduced the cost of financing seismic and other building improvements, Euphrat said. Additionally, the transaction will allow Chinese Hospital to see cashflow savings of more than $40 million over the next decade.

The size of the transaction stems from the nature of the project itself. “Not a surprise, the types of PACE improvements are significant when you talk about a new patient tower,” Euphrat said.

Euphrat and Robbins have spent much of their careers arranging C-PACE financing, most recently at CleanFund, and have spent an equally long amount of time educating borrowers, lenders and other constituent parties about the structure. “There are new geographies rolling out and see there is a lot of room for continued growth,” Euphrat said.

Bigger picture, there is substantial growth in the C-PACE market, with Eyzenberg Greencap last month teaming up with Reeds Bay Investment Group to provide the commercial real estate industry’s first joint senior construction and C-PACE loan program and Nuveen’s acquisition of C-PACE lender Greenworks Lending.