Athene Holding has entered into an agreement to acquire Petros PACE Finance, a leading provider of Commercial Property Assessed Clean Energy (C-PACE) financing to owners and developers of commercial properties throughout the United States.
Since 2016, Petros PACE Finance has originated over $700 million in long-term, fixed-rate financing for energy efficiency, water efficiency, renewable energy and resiliency projects.
C-PACE financing is active in 27 states and the District of Columbia and is secured by a special property tax assessment that provides a more affordable financing alternative to mezzanine debt and equity across a variety of commercial properties, including office, hospitality and retail.
In June 2021, Petros closed the largest-ever single C-PACE transaction and the first in New York City of $89 million, opening what is estimated to be the largest C-PACE market in the country and helping institutional sponsors fund commercial properties’ carbon reduction plans.
The investment in Petros PACE Finance will be managed by the team at Apollo, Athene’s strategic asset management partner, and together Apollo and Athene expect that the company will accelerate its rapid growth in C-PACE financing driven by new market expansion, sustainable construction and regulatory climate mandates. F
ollowing completion of the transaction, Petros co-Founders Mansoor Ghori and Jim Stanislaus will continue to lead the company and retain a minority interest along with other members of management.
“This transaction is a compelling opportunity to partner with the Company and its best-in-class team at the center of the ESG movement in commercial real estate, while building on our longstanding strategy of investing in businesses that add direct origination sourcing capabilities to our alpha-generating investment portfolio,” said Jim Belardi, Chairman and CEO of Athene.
“Climate concerns, tenant demand and legislative mandates are driving developers to look for new opportunities to make properties more energy efficient, and Petros PACE Finance is the industry leader providing flexible funding solutions to meet those needs. The Company’s successful track record and range of capabilities – from refinancings to originating new loans – are a clear advantage in a massive and rapidly growing market, and we are eager to support the platform. We look forward to working together as a funding partner to provide environmentally focused financing solutions to an even broader segment of the real estate industry.”
Mansoor Ghori, Co-Founder and CEO, and Jim Stanislaus, Co-Founder and CFO, of Petros PACE Finance, added, “Partnering with Athene and Apollo opens up many exciting possibilities for our team to rapidly scale our C-PACE business and accelerate growth of the Company. The vast resources and expertise of our new partners will provide crucial support and new opportunities to leverage our best-in-class direct origination capabilities to go deeper into the capital stack and provide more comprehensive solutions for our clients, while shaping the future of the C-PACE industry. This will be a significant advantage as we further expand into major metropolitan areas like New York City, Chicago and New Jersey.”
“Under Mansoor and Jim’s leadership, Petros Pace Finance has delivered strong risk-adjusted returns, driven by a world-class origination team and secured by the robust credit ratings of the underlying C-PACE assets,” said Apollo Co-President Jim Zelter. “For Apollo and Athene, Petros PACE Finance is highly complementary to our portfolio of diversified origination platforms and positioned for significant growth as more property owners seek financing for clean energy projects.”
The transaction is subject to customary closing conditions and is expected to be completed in the first quarter of 2022.
CIBC Capital Markets is serving as financial advisor to Athene, and Gibson, Dunn & Crutcher LLP and Sidley Austin LLP are serving as legal advisors to Athene. Barclays is serving as financial advisor to Petros, and Skadden, Arps, Slate, Meagher & Flom LLP and Winston & Strawn LLP are serving as legal advisors to Petros.