CleanFund gets $500M commitment for commercial real estate upgrade financing, new CEO

CleanFund has plugged into over $500 million in new backing for investments in clean energy and other upgrades to commercial real estate, lined up new follow-up funding, and hired a new CEO, the fast-growing Marin County-based company announced Tuesday.

The half-billion-dollar commitment comes from Starwood Capital Group’s newly launched Starwood Sustainable Credit, a venture that’s starting with commercial property assessed clean energy financing. It will be backing new C-PACE financing CleanFund originates. The first participation from this backing came for $7.8 million in upgrades in store for the historic Garland building in central Los Angeles, announced in March.

“C-PACE, even with its significant growth to date, is still a largely untapped opportunity in the multi-trillion-dollar commercial real estate industry,” said Jake Baker, head of Starwood Sustainable Credit, in the latest announcement. “More and more building owners, real estate lenders, and investors are embracing this innovative tool for optimizing the capital stack while providing highly competitive rates for energy, water, seismic and other improvements.”

Those types of projects are allowed under this type of funding, introduced in California in 2008. It uses parcel tax assessment financing, paid via the property tax bill. C-PACE financing has been adopted in 35 states and the District of Columbia.

And CleanFund picked Lain Gutierrez as CEO, as founder and C-PACE pioneer John Kinney moves to board chairman. Gutierrez has 28 years of experience originating, analyzing, structuring and rating asset-backed financing, according to the company.

He founded SolFin Capital, a specialty finance company with institutional backing which finances solar arrays in new residential developments. Before that, he was a senior rating analyst for DBRS and evaluated PACE financing securitizations, including CleanFund’s 2018-1 AAA-rated note, said to be the first 144A C-PACE securitization in the industry. At DBRS, he is said to have pushed for new methodology for rating PACE in July 2015 and energy savings performance contracts in December 2016.

“CleanFund has been the leader in taking C-PACE to nearly $1 billion in total funding since inception of this innovative tool, and our aim is to extend that several fold as more property owners learn about the advantages of C-PACE,” said Gutierrez.

The San Rafael company ranked on the Inc. 5000 list of fast-growing U.S. private companies for a second straight time last year. Sausalito-based CleanFund had 1,235 percent three-year revenue growth (to $5.7 million), which is the main requirement for the annual ranking, putting it at No. 405. That’s down from No. 331 in 2017.

CleanFund also ranked No. 20 last year among financial-services companies on Inc. magazine’s list.

Also just announced is an undisclosed amount of follow-up funding from an affiliate of Vulcan Capital that had participated in the $15 million series B round in late 2017.

“Vulcan Capital remains committed to backing businesses that have social and environmental impact, but also deliver a financial return to its customers,” said Ben Kolpa, managing director, Vulcan Capital, in the announcement.