Petros Launches C-PACE Condo Offering
By Andrew Coen May 16, 2024 11:40 am
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Petros PACE Finance has launched a lending platform designed to facilitate the development of condominium projects through Commercial Property Assessed Clean Energy (C-PACE) loans, Commercial Observer can first report.
The new offering from Petros enables condo developers to navigate pitfalls that previously prevented them from utilizing C-PACE financing due to the program’s traditional focus on properties with single commercial tax liens not suitable for residential condo units. The product includes fixed-rate financing that can be repaid as individual condo units are sold along with loan terms of three to four years instead of the typical 25 to 30 years for most C-PACE transactions.
“The problem has been that when you’re using commercial PACE it’s typically a very long-term instrument and it didn’t really fit very well with how condos were developed in the fact that they get sold off in a matter of three, four or five years and then it would fall under a residential PACE program,” Mansoor Ghori, CEO and co-founder of Petros PACE, told CO. “We tried to develop a product that would fit into commercial PACE but be a much shorter term product than the traditional commercial PACE product.”
The three- to five-year loan cycle will fit well for what is the typical development cycle of a new condo property between construction of the building and selling off all the units, according to Ghori. He noted that the offering will focus heavily on populous coastal areas like South Florida and Southern California where there is strong market demand for condos.
Ghori stressed that a new Florida law that will be taking effect next year in response to the 2021 deadly collapse of the 12-story Champlain Towers South building in Surfside, Fla., will amplify the need for more new condo projects that will benefit from C-PACE financing. The new regulations require all condo properties more than 30 years old to undergo inspections for seismic safety measures, which Ghori said will hamper a number of properties and spark the need for more developments.
“All those older buildings are now having huge assessments placed on them that they’re going to have to pass through to their condo unit owners, so you are seeing the value of those buildings go down,” Ghori said. “People are going to continue to develop these newer, more energy-efficient, more seismic- and hurricane-resistant condos that won’t have any of the issues that the older condos will have.”
Andrew Coen can be reached at acoen@commercialobserver.com
