PACE Sector Expected to Remain Stable
Over the past 18 months, the property assessed clean energy (PACE) sector has remained resilient despite the economic turmoil triggered by the ongoing coronavirus pandemic. Both commercial PACE (C-PACE) and residential PACE (R-PACE) transactions have continued to perform as expected, with delinquency rates remaining low and no realized principal losses to date. DBRS Morningstar expects the PACE sector to remain stable for the remainder of the year.• Although some C-PACE portfolios have exposure to hotel and retail properties, we have not witnessed any credit deterioration in securitized C-PACE transactions owing to a number of inherent features and factors: the seniority of amortizing C-PACE assessments, the liens on real estate properties, and the underlying low loan-to-value ratios (LTVs) have all contributed to the positive performance across the sector.
• On the R-PACE side, borrowers have benefited from the various unprecedented federal stimulus packages in the form of one-time payments and additional unemployment benefits.
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