Biggest PACE Bond Deal Yet Brings Company’s Total of Widely-Marketed PACE Green Bonds to $1.67 Billion
SAN DIEGO, Sept. 22 – Renovate America, the nation’s leading provider of residential Property Assessed Clean Energy (PACE) financing, announced the closing of its eighth securitization of PACE bonds – the largest such deal completed by any issuer and a designated green bond.
The securitization, HERO Funding 2016-3, includes $320.2 million of class A1 and A2 notes rated AA (sf) by Kroll and AA (sf) by DBRS. Moody’s Investor Service also assigned the notes a Green Bond Assessment of GB1 – its highest GBA grade.
The notes are initially secured by 12,394 PACE assessments levied on residential properties in 34 California counties as part of Renovate America’s HERO Program. The initial PACE assessments have an average balance of approximately $21,310, a weighted annual interest rate of 7.93 percent and a weighted average original term of 14.56 years. The initial PACE assessments were originated between May 3 and Aug. 12.
HERO green bonds have received significant interest, in part, because they do not fund aspirational or speculative projects; the proceeds have already been invested in home energy and efficiency improvements projects whose environmental impact is verified.
"As investor appetite for green bonds increases worldwide, we’re proud to offer a product that not only meets buyers’ discerning standards, but that also provides tangible benefits to society and the planet," said Renovate America CEO J.P. McNeill. "The platform we’ve created is bringing private money from around the world to invest in critical infrastructure improvements that reduce water and energy consumption, avoid greenhouse gases, boost the local economy and create clean energy jobs."
McNeill noted that the projects backed by the bonds are expected to lower homeowners’ water and energy bills by nearly $500 million over the useful lifetime of the products installed, avoiding half a million tons in carbon dioxide emissions – equivalent to taking more than 100,000 cars off the road for a year. Projects covered by this securitization have also created more than 2,500 jobs and stimulated local economies by well over $500 million, he added.
The HERO Bond platform is the first asset-backed securities (ABS) platform to solely produce green bonds, with each of the company's eight securitizations having been designated as green by Sustainalytics, an investment research firm specializing in environmental, social and governance (ESG) research and analysis. HERO bonds also adhere to the Green Bond Principles, a set of commonly agreed-upon standards in the capital markets on what constitutes a green bond.
"International demand for our bonds has grown substantially, with investors from Europe joining this most recent transaction – expanding interest in the HERO platform beyond North America and Asia," said Renovate America SVP for Capital Markets Adam Garfinkle.
The completion of Renovate America’s latest deal comes just weeks after an earlier securitization was recognized by GlobalCapital as the Best Green/Socially Responsible Investment Asset-Backed Securities Deal of the Year.
Renovate America partners with local governments to provide the HERO Program to homeowners who finance a wide variety of product installations to conserve water and energy, or to generate renewable energy. These installations include energy-efficient products like HVAC, windows, and roofing; renewable and alternative products like solar; and water efficiency products for indoor systems and outdoor landscaping.
Since its inception in December 2011, the HERO Program has financed more than $1.83 billion of improvements in more than 75,000 homes throughout California. It is currently available to 88% of California households, and just last week launched in Missouri. In addition to spurring significant water savings, HERO has financed projects that together will save more than 11.65 billion kWh of grid electricity.
About Renovate America
Renovate America partners with state and local governments to offer HERO, a property assessed clean energy (PACE) financing program, to communities. HERO is the leading residential PACE program in the U.S. and has financed more than $1.83 billion of improvements. This unique public-private partnership offers consumers access to financing for more than 60 types of home energy improvements without the need for government funding. The HERO Program has received a number of recognitions including a Climate Leadership Certificate for Innovative Partnerships by the U.S. Environmental Protection Agency, inclusion in the 2016 White House Water Summit, the Governor’s Environmental and Economic Leadership Award in California, and the Urban Land Institute Best of the Best.