Multifamily lender lowers interest rates for LEED-certified projects

Sources: U.S. Green Building Council, Washington, D.C.; CP staff

As part of its Multifamily Green Initiative, Fannie Mae is granting a 10 basis point reduction in the interest rate of a refinance, acquisition or supplemental mortgage loan for a multifamily property carrying certification or recognition under USGBC LEED, EPA Energy Star or Enterprise Green Communities programs. On a $10 million dollar loan amortizing over 30 years, an owner would save $95,000 in interest payments across a 10-year term based on 3.9 percent versus 4 percent market rate.

“This is a great demonstration of leadership from Fannie Mae, and the partnership between the multifamily finance and green building industry,” says USGBC CEO Rick Fedrizzi. “This is real money and an incentive to not only build green but also for existing buildings to achieve certification. For the first time, Fannie Mae multifamily lenders will be able to reward building owners for their better buildings.”

“We clearly see the value in the triple-bottom line of certified green buildings: financial benefits of lower operating costs for owners and tenants; social benefits of better quality housing for renters; and environmental benefits for everyone,” adds Fannie Mae Executive Vice President for Multifamily Jeffery Hayward. “Our lenders are ready with financing solutions to help multifamily owners make their properties more energy and water efficient for today and for the future.”

All loans financed under the lower interest rate will be also securitized as a Green MBS, growing the total volume of Green Bonds in the market for socially responsible investors to include in their portfolios. Fannie Mae is the leading provider of multifamily project financing in the U.S., with a portfolio valued at over $200 billion.

A U.S. Department of Energy study finds that LEED certified buildings, compared to conventional projects, consume an estimated 25 percent less energy and 11 percent less water, have 19 percent lower maintenance costs, 27 percent higher occupant satisfaction and 34 percent lower greenhouse gas emissions. —