Fannie Mae proclaimed their commitment to a more eco-friendly and green multifamily industry by announcing in February that they will be offering special, discounted or lower interest rates on any of the loans they make to any certified energy-efficient multifamily properties.
The idea of offering deep discounts to property owners who are willing to improve their properties’ energy performance doesn’t just make for a more sound investment in our future; this move is also designed to see the overall quality and affordability of these multifamily properties improve in the long run.
Fannie has agreed to lower the interest rates on any loans they make that either refinances, acquires, or is made as a supplemental multifamily mortgage loan on any qualifying green property by 10 basis points.
Fannie’s new program is designed to push multifamily builders and investors to seek more energy efficient alternatives for their new and existing projects. This push is seen as a much needed incentive for decision makers who might be on the fence about building or converting over to green energy and efficiencies.
This comes at a time when gaining green certification means becoming eligible for a number of green funding opportunities and a variety of rebate programs designed to help balance the additional costs of executing any new energy conversions. Because of this cost offset – which can sometimes equal the total cost of the conversion – more commercial investors and owners are choosing to gain Energy Star, LEED, and/or one of the other certifications available for energy efficient properties.
As far as the long-term financial benefits of these conversions, owners report lower overall maintenance and operating costs, improved tenant attraction and retention as renters report lower monthly energy costs and satisfaction from renting a better-quality unit, and then of course the basic environmental benefits that everyone recognizes and enjoys.
To qualify for Fannie Mae’s discount program the properties must have an EPA Energy Star, LEED, or Enterprise’s Green Communities certification and these loans will be classified as Green Bonds to attract eco-friendly investors looking to grow their current portfolios.
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Justin Alanis is the Co-Founder and CEO of Rentlytics Inc. Rentlytics is based in San Francisco, CA providing deep analytics for apartment property owners and managers. View and analyze property operational and financial metrics more effectively and identify issues.