Valley Bank, CPC commit up to $100M for ESG financing

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As New Jersey continues to face persistent and worsening drought conditions, it’s hard not to think about the changing climate—especially when you’re looking at your lawn. More and more, companies are looking to reevaluate their own impacts on the world around them, and the changes they precipitate, through ESG standards. Valley National Bank released its inaugural Environmental, Social and Governance report at the start of this year. Now, it’s seeking to incentivize others to make sure they’ve got ESG at front of mind as well.

Valley Bank said Aug. 18 it is partnering with The Community Preservation Corp. to fund up to $100 million in permanent loans for commercial real estate financing for new construction projects that meet certain ESG standards.

According to the Wayne-based financial institution, the collaborators want to effect change using the mortgage process by motivating developers to do more when it comes to creating sustainable development with a lower rate and higher leverage.

“As one of the premier regional banks in the country with more than 90 years of service, we understand the critical role we play in creating a sustainable future throughout the communities we serve,” Christopher Coiley, head of the Commercial Real Estate Lending Group at Valley Bank, said in a statement. “In CPC, we’ve found the perfect partner to help us fulfill that promise. As we move forward, we’ll continue to work with aspiring and innovative entrepreneurs who are making a positive impact on the local community and helping us create a more sustainable future for everyone.”

The first ESG-linked loan through the initiative closed Aug. 9.

Geneva, N.Y.’s 1 Solstice Lane LLC received $1.9 million through the CPC’s Sustainable Mortgage Program, according to Valley. The project is a 12-unit apartment complex that was completed in January. Among its ESG-aligned features are EV charging stations; high-efficiency pump systems for heating, cooling and hot water; and a rooftop solar array that is large enough to cover all electricity used by the building, Valley said, making the project Net Zero Energy.

The bank added that the offshoot of including those kind of amenities – added comfort and reduced utility costs – has helped drive lease-up at the property.

CPC President Sadie McKeown said that Valley was a “natural fit” for the partnership.

“With such a prevalent influence over the economics and condition of our housing stock, the lending industry has a tremendous opportunity to take the lead in advancing practices and policies that improve the financial and physical quality and sustainability of the buildings and communities in which we live and work,” she remarked about the potential for the program, and others like it.

According to Solar Village Co. partner Ryan Wallace, developer of 1 Solstice Lane, “From a developer perspective it is exciting to work with lending and origination partners who understand the financial benefits of sustainable design and construction.”

Sustainability initiatives are certainly cropping up more these days. EV chargers, for example, are seemingly becoming a standard add-on at multifamily communities and office offerings. For its part, when the former Mack-Cali Realty Corp. made its debut as Veris Residential, it announced that it would dedicate itself to meeting “the sustainability-conscious lifestyle needs of its residents by operating in a socially, ethically, and environmentally responsible manner.” Bergman Real Estate also recently touted its own efforts to enhance sustainability efforts across its portfolio.