Fannie Mae has enhanced its Green Rewards product by eliminating the cost of a required energy and water audit report and increasing loan proceeds to borrowers by enabling lenders to underwrite 75 percent of the owners’ projected cost savings.
Green Rewards continues to allow 25 percent of residents’ projected cost savings to be underwritten. Additionally, Fannie Mae will now pay 100 percent of the cost of the energy and water audit report, which includes the ASHRAE Level 2 report required for all Green Rewards and Green Preservation Plus loans.
The enhancements were announced in September. The program received considerable attention by attendees during the GreenBuild Conference in October in Los Angeles.
“Our Green Financing solutions are making positive, measurable changes at multifamily properties,” Chrissa Pagitsas, Director Green Financing Business, Fannie Mae, said in a press release. “The product enhancements that we’ve made further remove barriers for owners to make smart green investments, for tenants to live in better quality properties and for sustainability-focused investors to access a consistent supply of Green MBS.”
Green MBS enables qualified borrowers to receive approximately a 50 bps discount on loan pricing. The Peterson Companies took advantage of that benefit for its The Esplanade at National Harbor because it had earned a Leadership in Energy and Environmental Design (LEED) Certification for that community.
The 10-year, refinance loan terms for the 262-unit, Class-A apartment community, located in National Harbor, just south of Washington, D.C., includes five years interest-only followed by a 30-year amortization schedule. It was arranged by Walker & Dunlop.
Dan Martin, Senior Vice President for Walker & Dunlop says the loan was a first for both parties, it was the first sustainability-based Fannie Mae loan for Walker & Dunlop and it was The Peterson Companies’ first loan with Fannie Mae.
“The program provided the sponsor with a significant pricing advantage relative to other similarly leveraged assets,” Martin says. “We recognized that Peterson would qualify for it, so we recommended it.
“Everyone today is building to LEED specs, and to earn Silver is not too difficult or too expensive, especially for A properties. Earning LEED helps buildings to be competitive in what are already very competitive markets. And, the investors are buying into Green building, too.”
Martin says the program is also offered to retrofits, “but you have to ask yourself and do the math to see if retrofitting to LEED standards is worth the savings that this program would bring,” he says.
The program is available for existing properties, but they don’t have to improve to LEED standards, just make improvements to the efficiencies of their utility usage, Walker & Dunlop says.
Stuart Prince, Senior Vice President, Residential, for The Peterson Companies, “We believe in this program. It’s good for our customers.”
Fannie Mae’s Green Financing business supports loans for properties that will save 20 percent or more on their annual energy or water consumption by upgrading to energy- or water-efficient equipment, as well as for properties that have been awarded a green building certification, such as LEED, ENERGY STAR®, or National Green Building Standard.
To learn more about Fannie Mae’s Multifamily Green Financing business, visit www.fanniemaegreeninitiative.com. – From press releases and staff reports