Fannie Mae has created a new financing option for multifamily properties looking to undergo energy- and water-cost saving improvements.
In exchange for investing in environmentally friendly improvements, Fannie Mae's new Green Rewards program will deliver property owners extra loan proceeds and a lower all-in interest rate. The program is now available nationwide to both conventional and affordable multifamily properties as well as for cooperatives, senior, military and student housing properties, according to a press release Thursday.
A portion of project energy- and water-cost savings is factored into the loan's underwriting as part of Green Rewards. This allows for greater loan proceeds to result than a typical loan. Additionally, Green Rewards lowers the all-in interest rate by 10 basis points for further savings.
To take advantage of Green Rewards, property owners must show a projected 20% minimum consumption savings for energy or water from the improvements and report the property's Energy Star score annually.
Projects that property owners can pursue with the loan include installing Energy Star-certified HVAC systems, electricity-generating solar panels and water-reducing irrigation systems. Additional loan proceeds must go back into the property within the year following the loan closing.
By participating in the program, though, Fannie Mae said that stakeholders can expect additional benefits beyond those strictly tied to the loan.
"It means increased cash flows for the owners, lower utility expenses and better quality housing for tenants, and a high-quality asset backing our MBS for investors," said Jeffery Hayward, executive vice president and head of multifamily at Fannie Mae, in the release.
Green Rewards extends Fannie Mae's activity in green financing. In February, the government-sponsored enterprise announced a 10-basis-point reduction in interest rates on new loans for multifamily properties with existing Green Building Certifications. Furthermore, Fannie Mae launched Green Preservation Plus in 2011, which provides up to 5% in additional loan proceeds to affordable housing property owners who make energy and water efficiency upgrades.
