DBRS Morningstar Assigns Provisional Ratings to PACEWell 8 LLC

DBRS, Inc. (DBRS Morningstar) assigned provisional ratings to the following notes to be issued by PACEWell 8 LLC (the Issuer):

-- $248,883,000 Class A rated AAA (sf)
-- $7,698,000 Class B rated AA (sf)

The ratings are based on DBRS Morningstar’s review of the following considerations:

-- Transaction capital structure, proposed ratings, and form and sufficiency of available credit enhancement.
-- Hard credit enhancement in the form of overcollateralization and a liquidity reserve. Additional credit enhancement is in the form of an interest supplement account.
-- Credit enhancement levels sufficient to support the DBRS Morningstar-expected delinquency and loss severity assumptions under various stress scenarios.
-- The ability of the transaction to withstand stressed cash flow assumptions and repay investors according to the terms under which they have invested.
-- The capabilities of Greenworks Lending LLC (Greenworks or the Company) with regard to originations and underwriting.
-- DBRS Morningstar performed an operational review of Greenworks and considers the Company to be an acceptable originator of property assessed clean energy (PACE) assessments.
-- The legal structure and presence of legal opinions that will address the true sale of the assets to the Issuer, the nonconsolidation of the Depositor with Greenworks, that the Issuer will have a valid security interest in the PACE Asset Portfolio, and the consistency with DBRS Morningstar’s “Legal Criteria for U.S. Structured Finance.”
-- Review of legal considerations specific to PACE.
-- Servicing is mostly performed by local county tax collection offices.
-- The transaction assumptions consider DBRS Morningstar’s baseline macroeconomic scenarios for rated sovereign economies, available in its commentary “Baseline Macroeconomic Scenarios for Rated Sovereigns: December 2022 Update,” published on December 21, 2022. These baseline macroeconomic scenarios replace DBRS Morningstar’s moderate and adverse Coronavirus Disease (COVID-19) pandemic scenarios, which were first published in April 2020.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings (May 17, 2022).

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology applicable to the ratings is Rating U.S. Property Assessed Clean Energy (PACE) Securitizations (May 24, 2022; https://www.dbrsmorningstar.com/research/397234).

Other methodologies referenced in this transaction are listed at the end of this press release. These may be found at: https://www.dbrsmorningstar.com/about/methodologies.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

DBRS, Inc.
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New York, NY 10005 USA
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The rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

Rating U.S. Structured Finance Transactions (February 6, 2023)
https://www.dbrsmorningstar.com/research/409449/rating-us-structured-finance-transactions

Operational Risk Assessment for U.S. ABS Servicers (February 6, 2023)
https://www.dbrsmorningstar.com/research/409447/operational-risk-assessment-for-us-abs-servicers

Operational Risk Assessment for U.S. ABS Originators (November 8, 2022)
https://www.dbrsmorningstar.com/research/405082/operational-risk-assessment-for-us-abs-originators

Legal Criteria for U.S. Structured Finance (December 7, 2022)
https://www.dbrsmorningstar.com/research/407008/legal-criteria-for-us-structured-finance

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].