Separate transactions involve $206.1 million in asset-backed HERO bonds and $34.5 million in Benji unsecured home improvement loans
SAN DIEGO, May 24 – Renovate America, a leading provider of home improvement financing, today announced the closing of its 13th securitization of HERO Property Assessed Clean Energy (PACE) green bonds, as well as the second sale of Benji loans.
The well-subscribed securitization, HERO Funding 2018-1, included $187.8 million of class A2 notes which are the first PACE ABS bonds to earn a rating of AAA from DBRS. The securities are also rated AA (sf) by Kroll. Renovate America also sold $18.3 million in class B notes rated BBB (sf) by DBRS.
In addition to giving an AAA rating to the A2 notes, DBRS also placed Renovate America’s last eight HERO securitizations under review with positive implications.
A regional North American bank purchased the $34.5 million portfolio of Benji unsecured home improvement loans, which are designed for qualified borrowers. The Benji portfolio had a weighted average life of 23 months and a weighted average FICO score of 762.
“These two transactions showcase the strength of Renovate America’s integrated home improvement platform, which gives more options to homeowners wanting to improve their homes as well as contractors wanting to grow their business,” said Renovate America CEO Roy Guthrie. “Investors increasingly recognize the power of our platform and the value it’s generating across the marketplace.”
HERO and Benji are both point-of-sale home improvement finance products. HERO financing empowers homeowners to make qualified energy and efficiency improvements and pay for them over time at a competitive, fixed interest rate through an additional, voluntary line on their property taxes. The projects backed by the bonds in HERO Funding 2018-1 are projected to lower homeowners’ water and energy bills by more than $178 million over the useful lifetime of the products installed. Projects covered by this securitization are also estimated to have created approximately 1,600 jobs.
Benji can finance everything from home energy and efficiency upgrades – such as solar panels, high-efficiency HVAC systems, and replacement windows and doors – to kitchen and bath remodels. Benji is already available in 19 states covering more than half the U.S. population, and Renovate America projects it to be operational in nearly all states over the next 12 months.
The HERO notes are initially secured by HERO PACE assessments levied on 6,332 residential properties in 43 California counties and 12 Missouri counties. The initial PACE assessments have an average balance of approximately $23,700 and a weighted annual interest rate of 6.7 percent and a weighted-average original term of 17.8 years. The underlying municipal bonds in the initial pool were originated between Jan. 18 and May 18, 2018.
The HERO bond platform is the largest platform that solely produces green ABS bonds, with each of the company's 13 securitizations having been designated as green by Sustainalytics, an investment research firm specialized in environmental, social and governance (ESG) research and analysis. HERO bonds also adhere to the Green Bond Principles, a set of commonly agreed standards in the capital markets on what constitutes a green bond.
About Renovate America
Renovate America offers a tech-enabled financing platform for home improvement and commercial retrofits that empowers communities to modernize and make their housing stock more efficient, while giving small businesses the tools they need to grow. In addition to financing home improvements through an unsecured lending product, Benji, Renovate America offers communities HERO financing. HERO is the leading residential Property Assessed Clean Energy (PACE) program in the U.S. and has been used by the owners of over 110,000 homes to make energy and efficiency improvements. It is estimated that HERO is on track to save billions of dollars in energy and water bills, and has created over 25,000 local trade jobs that cannot be offshored or automated. Renovate America has built the world’s largest green bond platform, with a volume of originations that enables securitization of HERO PACE bonds multiple times a year, attracting international investment to meet U.S. clean-energy objectives.