Nuveen CPACE Lending Fund Offers Insurers Access to Capital Efficient Clean Energy Assets
Nuveen, the $1.1 trillion investment manager of TIAA, and Nuveen Green Capital (NGC), an affiliate of Nuveen and a leading provider of sustainable commercial real estate financing solutions, have launched a new fund to give insurers access to a diversified portfolio of energy efficient, climate resilient, water conservation and renewable energy projects.
The Nuveen CPACE Lending Fund is designed to efficiently aggregate the financing of commercial property-assessed clean energy (C-PACE) projects for the unique requirements of insurance investors, providing a capital efficient opportunity to access investment grade clean energy assets.
Six insurers have come together to form the initial group of investors.
Insurers Want to Invest in Energy Innovations
In a recent Nuveen survey of major global institutional investors, 82 percent of insurers said they plan to consider impact investments in the next year. In North America, 55 percent of insurers said they take climate strategy into account in their impact investing approaches. About eight in 10 insurers globally said they were investing in, or planned to invest in, energy innovations in the next two years; 79 percent identified infrastructure as a focus area of their impact investing.
“Insurers are interested in differentiated sources of capital efficient income, and increasingly motivated to address climate change,” said Joe Pursley, Head of Insurance, Americas, Nuveen. “The Nuveen CPACE Lending Fund mirrors those interests, offering the prospect of long-dated, attractive and stable risk-adjusted returns via an investment grade product that finances energy efficiency commercial real estate projects.”
C-PACE Financing Yields Compelling Benefits
For investors, a diversified portfolio of C-PACE loans, originated by NGC, benefits from the support of NGC’s national footprint, midmarket focus and proprietary underwriting model.
“The Nuveen CPACE Lending Fund is an exciting evolution in the C-PACE industry and sustainable real estate financing, broadly,” said Alexandra Cooley, CIO of NGC. “We are thrilled to deliver this proprietary investment opportunity to Nuveen’s growing insurance practice. The strategy invests in projects that reduce the environmental impact of buildings by increasing energy efficiency. This lowers operating expenses for businesses, helping them to compete locally and globally, and benefits local communities through the creation of jobs.”
Founded in 2015, NGC started as Greenworks Lending before Nuveen acquired and rebranded the company in 2021. NGC is a dominant C-PACE player, responsible for nearly 30 percent of historic market originations and the first to securitize the asset class. The NGC management team, including Jessica Bailey, CEO, and Cooley, helped build the original PACE policy framework in collaboration with state and local governments.
NGC estimates that its projects have saved 2.6 million megawatt hours of energy and reduced the equivalent of 1.9 million metric tons of carbon, while saving $1.6 billion in energy costs for property owners and creating nearly 26,000 energy jobs.