PACE Financing Tool Gains Momentum in Challenging Development Environment

Rafi Golberstein, PLG CEO, says there are many reasons why developers like PACE financing today, but the most important is the cheaper cost of capital. REBusinessOnline spoke with Golberstein to learn more about the financing tool and its benefits.

REBusinessOnline: What is driving momentum for PACE financing?

Rafi Golberstein: PACE is effectively solving a hole in the capital stack. In today’s market when banks and mortgage lenders have tightened up significantly, typically lending less and providing less leverage, that creates a pretty large equity check requirement that is significantly larger than it was two years ago. PACE is coming in to help alleviate some of that pressure to allow these projects to still move forward. 

In some cases, we’re actually cheaper than the banks. For the developer, it makes a lot of sense to use PACE. There are other structural reasons as well. Bank loans are typically five-year terms; PACE loans we write are typically 25- to 30-year terms with fixed rates and nonrecourse.