AUSTIN, Texas and NEW YORK, June 16, 2021 /PRNewswire/ -- Petros PACE Finance, LLC, the leading provider of Commercial Property Assessed Clean Energy (C-PACE) financing, has closed an $89 million C-PACE transaction for the iconic 111 Wall Street building in the first ever C-PACE deal completed as part of New York City's recently launched C-PACE program. The funding is also the largest single C-PACE transaction ever closed in the United States since the financing structure debuted more than 10 years ago to help make sustainability improvements more affordable for property owners.
The 111 Wall Street PACE financing is part of the $500 million acquisition and reposition financing closed by the building's joint venture-partners, Wafra Capital Partners and Nightingale Properties. The planned PACE-eligible renovations for the 1.2 million square-foot, 25-story high-rise office building will significantly reduce its carbon footprint including a full upgrade to the building's façade and a complete infrastructure overhaul with state-of-the-art HVAC air conditioning and mechanical-electrical-plumping (MEP) systems, plus fully redundant power systems. The property intends to complete construction and lease-up in 2023 and achieve LEED Silver certification.
"This transaction is a transformational event for the C-PACE industry because it officially launches potentially the largest C-PACE market in the country, New York City, and highlights the breadth and scope of how C-PACE can be used by institutional sponsors to fund their carbon reduction requirements," said Mansoor Ghori, CEO of Austin-based Petros PACE Finance. "We anticipate a ripple effect across the country as available capital increases and the benefits of the program become more widely known. In addition, we are grateful to both the Mayor's office and NYCEEC, for working with us through this complex transaction to get it done in a timely manner."
New York City's Climate Mobilization Act of 2019 requires large properties to cut carbon emissions 40 percent by 2030 and 80 percent by 2050. The non-profit Urban Green Council estimates that the retrofits required will cost building owners approximately $20 billion through 2030. Institutional investors and global capital sources are also pressing building owners to reduce carbon footprints as part of Environmental, Social and Governance (ESG) goals.
"With these improvements, 111 Wall Street will be well-positioned to meet New York City's requirements and attract today's tenants that seek to lease buildings with forward-thinking green designs and environmental sustainability," said Michael Gontar, Chief Investment Officer of Wafra Capital Partners. "We chose to work with Petros because of their industry-leading experience and execution capability giving us certainty of close on a C-PACE transaction of this size."
"This financing highlights the strengths of our ability to execute on very large transactions with our committed institutional investor partners," said Jim Stanislaus, CFO of Petros.
"With our deep experience and strong capital resources, Petros has a unique ability to finance complex transactions with large, investment grade owners and financiers of commercial real estate projects," said Andy Meyer, Senior Vice President at Petros. "Wafra Capital Partners and Nightingale Properties, two of the strongest owner-operators in the country, are now able to transform 111 Wall Street with this C-PACE financing from Petros, along with debt from a lending consortium that included SKW Funding, PIMCO, Oaktree Capital and Bain Capital."
Seen as a gamechanger in sustainable development finance, C-PACE is a long-term financing product secured by a property tax assessment that provides developers with a more affordable alternative to mezzanine debt and equity. The low-cost funding can be used for energy efficiency, renewable energy and water conservation improvements to commercial properties as retrofits or during new construction in 37 states and Washington D.C.
About Petros PACE Finance
Petros PACE Finance, LLC is the national leader in the C-PACE marketplace, dedicated solely to providing long-term C-PACE financing to commercial property owners seeking to lower energy costs, reduce their carbon footprint and increase property values and meet environmental, social and governance (ESG) goals. Its leadership team has decades of executive-level experience in private credit and structured finance, with direct long-term institutional investor relationships. With billions in committed capital, Petros is able to close transactions in eligible C-PACE markets nationwide. To learn more about Petros PACE Finance visit our website at www.petros-pace.com.