(Bloomberg) — Carlyle is buying a minority stake in North Bridge ESG LLC, a finance firm that focuses on a type of private credit lending to landlords for clean energy projects.
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The transaction also includes Carlyle committing up to $1 billion to help North Bridge make loans, according to a statement seen by Bloomberg.
North Bridge focuses on putting together what are known as commercial property assessed clean energy, or C-PACE loans, that real estate owners and operators can use to, for example, make upgrades to properties, recapitalize existing holdings, or help to fund new construction projects. Payments added to the landlord’s property tax bill then pay off the loan over time.
Banks in recent years have been retreating from commercial real estate lending, leaving assets that need financing, said Laura Rapaport, founder and chief executive officer of North Bridge. On top of that, more states are adopting legislation for C-PACE loans, while demand for sustainable property development is growing, she said. About 40 US states and Washington DC have laws allowing the financing.
“It’s really those three things combined that make it the perfect storm to be a capital markets solution,” Rapaport said in an interview.
For Carlyle, the investment in North Bridge and the agreement to provide money for future loans is a way to put investor dollars to work in an asset class considered relatively low risk, and one that’s expected to grow, Akhil Bansal, head of credit strategic solutions at Carlyle, said in an interview. Carlyle is making the transaction through its credit strategic solutions and private credt teams.
“If you look at the market opportunity in front of North Bridge, just given the size of the commercial real estate market, 40 states, applicability to all these types of real estate, new construction, refinance — that’s a massive market opportunity,” Bansal said. “I mean, massive, and we’re on the early end.”
The law firm Paul Hastings advised Carlyle, while Latham & Watkins and Chapman and Cutler advised North Bridge.
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