C-PACE and IDEAL™ financing requires consent or acknowledgment by existing lienholders. We don’t want our clients closing on PACE or IDEAL™ loans that could trigger an Event of Default with other lenders.
Most developers and property owners ask us why Lenders consent to PACE or IDEAL™ financings that give PACE or IDEAL™ assessments a superior lien status to their own. In fact, over 80% of C-PACE and IDEAL™ Lender Consent requests are approved and banks are routinely consenting multiple times.
Why Do Banks Consent to C-PACE and IDEAL™ Financing?
- PACE or IDEAL™ funds pay for measures that reduce energy cost and can increase the NOI of a property (improves the collateral value of the asset)
- PACE or IDEAL™ funds are used to modernize buildings that improve the marketability of the building for leasing, re-leasing and sale
- PACE or IDEAL™ funds help bank borrower clients do more projects and diversify risk
- PACE or IDEAL™ funds help fill financing gaps to get a project started
- C-PACE and IDEAL™ loans do not accelerate. If a property is foreclosed by a bank or first lienholder, the bank will only need to pay the PACE or IDEAL™ special assessment each year when due like they do with property tax. The bank has full control of the foreclosed asset
- Banks will only consent to PACE or IDEAL™ financings when the current or projected cash flow from the property (including the energy and operating savings from the installed PACE or IDEAL™ measures) is sufficient to meet their Debt Service Coverage ratios
- Assisting their borrower clients with other financing tools is good business for banks
We work with our clients and their senior lenders to obtain Lender Consent/Acknowledgment of a PACE or IDEAL™ financing early in the process.
For more information, check out our blog post: Lender Consent – Why Do Lenders Say YES to PACE?