by Brianna Crandall — February 16, 2015—The U.S. Green Building Council (USGBC) recently announced that national mortgage company Fannie Mae will reward multifamily properties with a green building certification, such as LEED, with a lower interest rate. USGBC’s Leadership in Energy and Environmental Design (LEED) green building rating system is one of several recognized certifications, including ENERGY STAR and the Enterprise Green Communities Criteria.
For these certified properties under its Green Initiative, Fannie Mae is now granting a 10 basis point reduction in the interest rate of a multifamily refinance, acquisition or supplemental mortgage loan. For example, if the market interest rate is 4% on the multifamily loan, the new rate is 3.9% with this pricing break. On a $10 million dollar loan amortizing over 30 years, the owner would save $95,000 in interest payments over a 10-year term.
“This is a great demonstration of leadership from Fannie Mae, and the partnership between the multifamily finance industry and the green building industry,” said Rick Fedrizzi, CEO and founding chair, USGBC. “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.”
Jeffery Hayward, executive vice president for multifamily, Fannie Mae, added, “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. 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 this lower interest rate will be also securitized as a Green MBS (mortgage-backed security), growing the total volume of Green Bonds in the market for socially responsible investors to include in their portfolios. Fannie Mae (originally the Federal National Mortgage Association [FNMA]) is the leading provider of multifamily financing in the United States, with a portfolio valued at more than $200 billion.
According to USGBC, LEED buildings have been proven to have lower monthly energy and water costs, leaving more disposable income for families and creating healthier and more comfortable indoor environments for occupants. In a study from the U.S. Department of Energy, it was reported that LEED buildings are estimated to consume 25% less energy and 11% less water, and to have 19% lower maintenance costs, 27% higher occupant satisfaction, and 34% lower greenhouse gas emissions.
For more information see Fannie Mae’s Multifamily Green Initiative Web site.
