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PACE IN THE CAPITAL STRUCTURE<br />
PACE bonds provide the investor a repayment stream secured by a tax lien on<br />
the unleveraged property for the PACE bond payment<br />
• Traditional equipment financing is deeply linked to the credit quality of the<br />
borrower since the equipment itself provides poor collateral.<br />
• By using PACE bonds, a financing based on Energy Efficiency and Renewable<br />
Energy equipment move from the bottom of the capital stack to the top<br />
Payment Priority<br />
Traditional Finance<br />
Property Tax Lien<br />
First<br />
Mortgage<br />
Traditional Finance*<br />
Equity<br />
PACE Structure<br />
PACE + Tax Lien<br />
First<br />
Mortgage<br />
Equity<br />
* Traditional Finance include Credit Lines and Leasing. In some cases, the<br />
assets may be ring-fenced, which still represents an inferior collateral<br />
position to PACE as it is limited to the net salvage of asset collateral.<br />
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