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February 14, 2020  

Fund Operator Maps C-PACE Issuance Plan

An affiliate of commercial Property Assessed Clean Energy lender Samas Capital is starting a series of funds that would purchase some of its parent’s loans for eventual securitization.

Samas Asset Management of Coral Gables, Fla., is working to raise $100 million for the first vehicle. With a minimum contribution of $250,000, the offering is aimed at investors that otherwise may lack the large lump sums needed for direct exposures to commercial-PACE loans, including smaller institutions and wealthy individuals.

Once the fund deploys all of its capital — possibly by yearend — Samas Asset Management would securitize the holdings via a senior-subordinate structure. Proceeds from the senior bonds would be reinvested in new loans. The junior notes, which are entitled only to residual interest but are expected to produce returns exceeding 20%, would be retained by the vehicle.

Commercial PACE financing is repaid via property-tax assessments that are senior to any mortgages, with terms as long as 25 years. The proceeds can go toward a mix of energy-efficient property upgrades, with Samas Asset Management’s fund generally pursuing loans tied to improvements of $10 million or less.

The idea is that borrowers in that range are relatively underserved and thus can generate more attractive returns than larger ones, which typically are tied to new construction.

A focus on smaller projects also makes it possible to diversify the fund’s assets by property type and location, an important consideration for an eventual securitization. Samas Asset Management also is planning a tax-exempt fund that would finance PACE loans on properties including churches, hospitals and buildings owned by other nonprofit organizations.

Samas Capital, meanwhile, plans to stick with its strategy of selling larger loans to major institutional investors. The Irvine, Calif., company is among the biggest commercial-PACE lenders and administrators but has never issued asset-backed bonds.

Samas Capital was founded in 2010 by residential-mortgage veteran Mark Aarvig, whose former employers include Deutsche Bank, Impac Mortgage and IndyMac Bank. Aarvig also serves as chief investment officer of Samas Asset Management.

Samas Asset Management’s investment committee also includes Dan Castro, Chris Donnelly and Todd Traskos. Castro is head of the investment committee. He has been running a consulting service since 2011, with a resume that also includes stops at BTIG, Huxley Capital, Merrill Lynch and Moody’s. Donnelly, who holds the title of chief legal officer, has run his own law firm in addition to spending time at Mesirow Financial, Structured Finance Advisors, Duff & Phelps and Moody’s. Traskos worked in sales at Mesirow and Incapital.

CORRECTION (2/21/20): This article has been revised. The original version mischaracterized the junior class of an expected securitization from Samas Asset Management. The notes, backed by commercial Property Assessed Clean Energy loans, are entitled only to residual interest. They aren’t entitled to excess spread.