Property Assessed Clean Energy Bond Securitizations Surpass $1 Billion Sixth Securitization of PACE Bonds by Renovate America Totals $217.5 Million; Brings Total of Widely Marketed PACE Bonds to $1.05 Billion

SAN DIEGO, Feb. 12, 2016 /PRNewswire/ — Renovate America, the nation’s leading provider of residential Property Assessed Clean Energy (PACE) financing in the U.S., announced its second “green bond” and sixth overall securitization of PACE bonds. This securitization represents $217,503,000 in Class A Notes rated AA (sf) by Kroll and AA (sf) by DBRS, secured by 9,252 PACE assessments levied against residential properties in 27 California counties. The PACE assessments have an average balance of approximately $24,236, a weighted-average annual rate of 7.94 percent and a weighted-average original term of 14.78 years. The PACE Assessments were originated between October 2015 and December 2015.

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“This second PACE green bond means more than $1 billion in private capital has helped lower utility bills, reduce carbon emissions, and create clean energy jobs at no cost to taxpayers,” said Renovate America’s CEO J.P. McNeill, whose company represents more than 90 percent of the residential PACE market nationwide. “Investor interest in PACE bonds is strong and growing—and the green bond designation has brought new capital support for these public policy objectives.”

PACE green bonds have received significant interest in part because they do not fund aspirational or speculative projects; the proceeds have already been invested in projects with verified environmental impact.

“We are very appreciative of the ongoing support from investors who have participated in our program since our inaugural ABS issuance as well as new investors in HERO 2016-1,” said Renovate America’s SVP for Capital Markets Adam Garfinkle. “As more investors get familiar with the nature of the underlying assets, they are discovering HERO bonds provide significant relative value versus bonds of similar credit and duration.”

“Morgan Stanley is pleased to underwrite this green bond transaction for Renovate America,” said Ricardo Rodriguez, an Executive Director at Morgan Stanley. “Renovate America has created a strong asset class that gives investors more sustainable options, but also brings private capital to the shared community goals of reduced emissions, lower operating costs for homes, and clean energy job creation.”

Sustainalytics, a leading global provider of ESG and corporate governance research, ratings and analytics, assessed the offering’s adherence to green bond principles and confirmed that the selection process for Renovate America’s projects and products is strong.

“We are delighted to work with Renovate America on their second green bond,” said Sustainalytics’ Global Director of Advisory Services Simon MacMahon. “With this bond Renovate America continues to expand its efforts in offering homeowners financing for investments in energy-efficient home improvements, which has a positive impact on the environment.”

Renovate America partners with local governments to provide its version of PACE, the HERO Program (Home Energy Renovation Opportunity), to homeowners who finance a wide variety of product installations to conserve water and energy. These installations include energy-efficient products like HVAC, windows, and roofing; renewable and alternative products like solar; and water efficiency products for indoor systems and outdoor landscaping. HERO is unique in that it provides 100% financing for energy and water savings products for up to 20 years with fixed interest rates designed to make payments affordable. Homeowners make payments along with their property taxes, and in the event the property is sold, the remaining balance may be able to transfer to the new owner.

Since 2011, the HERO Program has financed more than $1.2 billion in home improvements which will save more than $2 billion on energy bills, conserve more than 8 billion kWh of electricity, reduce emissions by more than 2 million tons, and save more than 3 billion gallons of water. It has already created 10,587 jobs across California and had a local economic impact of more than $2 billion.

HERO is the largest and most successful residential PACE Program in the United States. More than 375 cities and counties have adopted the program across California, including the cities of Los Angeles, San Francisco, San Diego, Sacramento, San Jose, Fresno, Riverside, Anaheim, Santa Ana, Bakersfield, and San Bernardino, among others.

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