FASTPACE closed a C-PACE note sale between platform lenders, a "first" that is an important proof point for banks and other lenders interested in funding middle-market C-PACE. A community bank that originated a C-PACE deal two years ago and closed it on the FASTPACE platform sold the note in a one-to-one transaction to a larger lender with balance sheet appetite for C-PACE. In this case, the sale was the first such transaction under Montana's Last Best PACE program.
At FASTPACE, we believe C-PACE is a bank product. This milestone is part of the story of how that works. C-PACE financing terms typically span 20 to 30 years, a duration that may not always match a bank's balance sheet management strategy regardless of how strong the underlying credit is. Without a reliable way to recycle capital, many banks have been reluctant to originate C-PACE at all.
FASTPACE is built to address this hurdle so banks can continue to serve clients with C-PACE and earn market share. Lenders originating C-PACE on the FASTPACE platform can take comfort in a tested path for liquidity for middle-market C-PACE assets, ranging from individual note sales (as in this instance) to pooled portfolios, and a future that could feature capital markets securitizations of middle-market C-PACE paper. This note sale shows that path working in practice.
In this case, the deal was originated with a rate-reset structure rather than a single fixed rate for the life of the loan. Under this structure, the loan carries a fixed rate for a discrete term, typically three or five years, that resets to the Treasury benchmark plus a set spread at the start of each new period. For both borrowers and lenders, this structure provides an attractive alternative to the more traditional fixed-rate C-PACE approach, and FASTPACE is pleased to have led uptake of this innovation. The periodic repricing is another tool for asset/liability matching: it keeps the loan's rate tied to current market conditions rather than fixed for decades.
As more banks season C-PACE assets on their books, FASTPACE expects C-PACE trades by and among banks to become increasingly routine. We're proud to play a role in this continued evolution of the C-PACE industry and help accelerate development of the secondary market for deals of all sizes.
