Renovate America sells HERO PACE green bonds totaling $205 million

By Marisa Wong

Morgantown, W.Va., Aug. 4 – Renovate America announced it closed its 11th securitization of HERO Property Assessed Clean Energy (PACE) green bonds.

The securitization, HERO Funding 2017-2, includes $182 million of class A1 and A2 notes (Morningstar: AAA/Kroll: AA(sf)/DBRS: AA(sf)) and $23 million of class B notes (DBRS: BBB(sf)).

The notes are initially secured by HERO PACE assessments levied on 6,080 residential properties in 39 California counties, according to a press release.

The initial PACE assessments have an average balance of about $22,477, a weighted annual interest rate of 7.32% and a weighted-average original term of 17.4 years. The underlying bonds in the initial pool were originated between May 10 and July 14.

The deal was well subscribed, and the strong demand enables Renovate America to expand its investor base, the company said in the press release. The 10 new investors in HERO bonds represent a diverse mix of buyers, comprising European accounts, pension plans and dedicated green bond funds.

Including this securitization, Renovate America has raised over $2.5 billion of funds to invest in energy and efficiency improvements that benefit local homeowners and their communities. The projects backed by the bonds in HERO Funding 2017-2 are expected to lower homeowners’ water and energy bills by more than $221 million over the useful lifetime of the products installed. Projects covered by this securitization are also estimated to have created more than 1,500 jobs, the company said.

The HERO bond platform is the largest asset-backed securities platform to solely produce green bonds, with each of the company’s 11 securitizations having been designated as green by Sustainalytics, an investment research firm specialized in environmental, social and governance research and analysis. HERO bonds also adhere to the Green Bond Principles.

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 residential energy efficiency, renewable energy and water efficiency projects with verified environmental impact.

Renovate America is a San Diego-based provider of home improvement financing.

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