C-PACE Lenders Sketch Out Remics

A ruling by the IRS likely will reshape how Commercial Property Assessed Clean Energy lenders structure their securitizations.

Word is several originators are gearing up to package CPACE assessments via real estate mortgage investment conduits after the agency confirmed that such securitizations are eligible in a recent private letter to a client of law firm Dechert.

Dechert is developing a Remic structure for C-PACE assessments and expects to see more activity in the area.

That said, private-letter rulings apply to specific sets of circumstances and generally are not reliable as precedents. As such, some C-PACE lenders might not become comfortable with Remics until the IRS hands down a second or even a third ruling. The initial ruling nevertheless “opens the door to a much larger conversation” with potential investors, said Rafi Golberstein, chief executive of PACE Loan Group.