Canada Infrastructure Bank (CIB) is opening a new way for small and mid-sized landlords to tap into retrofit funds for decarbonization projects that can cut greenhouse gas (GHG) emissions by at least 30 per cent. BMO has signed on as the first banking aggregator for the Building Retrofit Initiative, promising low-cost financing and potential waiving of administrative fees for borrowers achieving a 50 per cent reduction in GHG emissions.
The bank joins other CIB aggregators, such as SOFIAC, Johnson Controls and EfficiencyCapital, which are facilitating building upgrades through the energy service company (ESCO) model. The new banking aggregator option would allow smaller proponents to work with other delivery agents, provided their upgrade projects meet the requirements of either the Canada Green Building Council’s investor-ready energy efficiency (IREE) certification or its zero carbon building standards.
Under the program parameters, the CIB only deals directly with borrowers that can take on loans of at least $25 million and bring 20 per cent equity to the agreement, leaving others to participate through a designated aggregator. Speaking during a webinar sponsored by REALPAC earlier this spring, Aaron Berg, the CIB’s director of energy efficiency investments, noted that banking participation agreements are considered an important “emerging product” to complement the nearly $400 million thus far deployed through ESCO-type aggregators.
“There will be lots of choice in the market, capitalized by CIB,” he said.
CIB’s $100 million contribution along with BMO’s equity share creates a $125-million fund for borrowers targeting emissions reductions. It’s expected that other Canadian banks and credit unions will follow suit.
“We’re proud to serve our clients at the leading edge of sustainable finance innovation in the real estate sector and to be the first financial institution in Canada to offer this unique financing program,” says Michael Beg, senior vice president and head of real estate finance at BMO Commercial Bank.
