FOR IMMEDIATE RELEASE
August 25, 2020
MD-PACE Assists in Commercial PACE Project for Multifamily Residential Property in Baltimore, MD
MD-PACE assisted in the closing of a C-PACE deal between Equity Warehouse and Greenworks Lending in early August for a project that will increase energy efficiency and value for a multifamily residential property in Baltimore City.
Baltimore, MD. – In early August, the owner of a multifamily residential property on White Avenue, Baltimore City finished closing a C-PACE agreement that will finance a series of energy-efficiency improvements to the units. The appeal of C-PACE to the borrower was the greater energy efficiency that could be achieved with zero-money down financing and a long term of repayment. The total C-PACE assessment exceeds $720,000.00 and will be repaid over a 25-year term, enabling greater cash flow. The firm that purchased the White Avenue property, Equity Warehouse LLC, intends to continue leasing the refurbished units. The closing of White Avenue adds yet another C-PACE project to the Baltimore City area as developers, contractors, and building owners increasingly turn to C-PACE to diversify financing or bridge capital gaps, expand business offerings, and improve property efficiency and profitability.
The scope of improvements to the White Avenue property included improvements to the roof and windows that will result in greater energy efficiency. Exterior defects, poor insulation, and windows that facilitate heat exchange are not only wasteful, they can also result in bloated utility bills in extreme heat or cold. With these new improvements, future residents will enjoy greater comfort and pay less for heating and cooling. The purchasing company, Equity Warehouse LLC, was founded in 2012 to provide value to shareholders through purchasing property in the Baltimore area, investing capital and effort into improving them, and sharing the profits from ensuing sales or rentals. Cofounders Ian Horowitz and Dan Mathe designed Equity Warehouse to transform property into high-quality and attractive assets for prospective owners and they share a commitment to providing comfortable, durable housing for renters. Furthermore, Mr. Horowitz and Mr. Mathe share another vocation: firefighting. Both cofounders of Equity Warehouse continue to work fulltime as firefighters, protecting communities and investing in them simultaneously.
C-PACE can be a smart investment for multifamily residential property and provide benefits to both owners and renters. A commonly cited barrier for efficiency investments in properties where the investor does not reside is that the benefits of the improvements go to the occupants while the costs and risk remains with the investor. Conversely, renters shy away from investing in properties that they do not believe they will live in for the entirety of the estimated useful life of the improvement. This split incentive barrier prevents efficiency improvements from occurring, as neither party wants to be left with debt. However, C-PACE financing can overcome split incentives by running with the property rather than the initial borrower, and also for the potential to pass payments off from the property owner to the property resident in a triple-net lease. The owner can therefore invest freely in a property, certain that they are only responsible for payments during their ownership and not after, and tenants can enjoy the savings from high efficiency improvements. This is especially true of low-income multifamily housing where residents spend proportionally three times more on energy than others. C-PACE also may allow capital providers to more easily lend to this market segment. Said Michael Billingsley, Business Development Director, Mid-Atlantic, Greenworks Lending, “Greenworks is proud to be part of a significant renovation of the White House Apartments in Baltimore. This project clearly illustrates the ability of C-PACE financing to help transform debilitated assets into profitable and energy efficient properties.”
The MD-PACE program encourages all commercial property owners with interest in saving money through C-PACE or investing in high-efficiency improvements to contact firstname.lastname@example.org.
About the MD-PACE Program
The MD-PACE program is sponsored by the Maryland Clean Energy Center (MCEC), a corporate instrumentality of the state of Maryland which advances the adoption of clean energy, energy efficiency products, services and technologies. MCEC leverages private capital to help homeowners, businesses, and government entities reduce energy costs. The MD-PACE program offers C-PACE financing to commercial property owners statewide.