Carlyle is teaming up with North Bridge ESG LLC to commit as much as $1 billion towards lending for commercial properties.
North Bridge offers what's called commercial property-assessed clean energy (C-PACE) loans to institutional borrowers across the country. The loans serve as a private credit solution, come with a fixed rate, and can be used for several commercial real estate services including construction, purchases, renovations, and recapitalizations.
Carlyle said in a statement that C-PACE financing offers "accretive benefits to commercial real estate capital stacks." Under the collaboration, Carlyle will provide up to $1 billion to North Bridge, which will help it address market needs.
"Our partnership with North Bridge, a leader in providing capital market solutions to commercial real estate owners, allows us to further meet the financing demands facing the industry," said Carlyle principal Rachel King, who is focused on opportunistic real estate credit.
"Banks have pulled back from commercial real estate lending due to concentration risk in the sector, resulting in a dynamic that we believe should yield attractive relative value opportunities for C-PACE lenders with capital to deploy today."
To get the partnership done, Carlyle leveraged its Credit Strategic Solutions unit, which is focused on providing financing answers to businesses, and Private Credit teams. As of June, CSS had almost $5 billion invested, while maintaining $7 billion in assets under management.
"We are pleased to bring together Carlyle's significant expertise in asset backed finance and real estate credit to help commercial real estate owners address their financing needs," said Akhil Bansal, head of Carlyle's CSS.
While high interest rates have led to a lack of appetite in the CRE space, the fundamentals have been slowly improving. For example, second-quarter investment volume in the capital markets was up 14 percent at $85.7 billion from the first three months of the year. In addition, CRE operators might get a gift this week, as the Federal Reserve is set to start cutting interest rates for the first time in four years.