The U.S. Green Building Council (USGBC) announced that Fannie Mae will reward multifamily properties with a green building certification, such as LEED, with a lower interest rate. USGBC’s LEED green building rating system is one of several recognized certifications including Energy Star® and Enterprise’s Green Communities Criteria.
For these certified properties, 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 of 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.”
All loans financed under this 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 a leading provider of multifamily financing in the U.S., with a portfolio valued at more than $200 billion.
"Fannie Mae is leading the way in financing by offering new lower interest rates for green building certified multifamily properties,” said Jeffery Hayward, executive vice president for multifamily at Fannie Mae. “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."
For more information on Fannie Mae’s Multifamily Green Initiative, visit www.fanniemaegreeninitiative.com.