Retirement services and investment solutions company Athene announced an agreement to acquire Commercial Property Assessed Clean Energy (C-PACE) financing provider Petros PACE Finance.
Petros PACE Finance provides owners and developers of commercial properties throughout the United States with long-term financing for energy efficiency, water efficiency, renewable energy and resiliency projects, with originations exceeding $700 million since 2016. The company will continue to be led by co-Founders Mansoor Ghori and Jim Stanislaus, who will retain a minority interest.
The transaction comes as buildings come increasingly into focus as a key investment area for the low carbon transition. Buildings represent roughly 15% of global greenhouse gas (GHG) emissions, and are one of the hardest to decarbonize, given their long-term nature, leading to a need for new buildings to be developed with significantly greater energy and water efficiency standards, and for upgrades for the existing built environment.
Jim Belardi, Chairman and CEO of Athene, said:
“Climate concerns, tenant demand and legislative mandates are driving developers to look for new opportunities to make properties more energy efficient, and Petros PACE Finance is the industry leader providing flexible funding solutions to meet those needs. The Company’s successful track record and range of capabilities – from refinancings to originating new loans – are a clear advantage in a massive and rapidly growing market, and we are eager to support the platform.”
C-PACE is a program that enables building owners to borrow money for clean energy projects such as renewable energy or energy efficiency, with repayments made through an assessment on their property tax bill, providing a more affordable financing alternative to mezzanine debt and equity. Petros PACE Finance recently closed the first C-PACE deal in New York City, marking the largest ever single C-PACE transaction at $89 million.
Petros PACE Finance’s Ghori and Stanislaus said:
“Partnering with Athene and Apollo opens up many exciting possibilities for our team to rapidly scale our C-PACE business and accelerate growth of the Company. The vast resources and expertise of our new partners will provide crucial support and new opportunities to leverage our best-in-class direct origination capabilities to go deeper into the capital stack and provide more comprehensive solutions for our clients, while shaping the future of the C-PACE industry. This will be a significant advantage as we further expand into major metropolitan areas like New York City, Chicago and New Jersey.”
The investment in Petros PACE Finance will be managed by Apollo Global Management. Apollo announced the roughly $11 billion acquisition of Athene earlier this year, with the transaction expected to close in January 2022. The companies stated that they expect to accelerate Petros PACE Finance’s growth in C-PACE financing driven by new market expansion, sustainable construction and regulatory climate mandates.
Apollo Co-President Jim Zelter said:
“Under Mansoor and Jim’s leadership, Petros Pace Finance has delivered strong risk-adjusted returns, driven by a world-class origination team and secured by the robust credit ratings of the underlying C-PACE assets. For Apollo and Athene, Petros PACE Finance is highly complementary to our portfolio of diversified origination platforms and positioned for significant growth as more property owners seek financing for clean energy projects.”