SPI in Connect Media – Q&A: Sustaining Green for Multifamily

Connect Media Commercial Real Estate | November 29, 2017 | by Colin Cross

“An early supporter of the Fannie Mae Green Rewards program, Hunt Mortgage Group has had a highly successful year in supporting green financing funded through the program. Fannie Mae, the market leader in multifamily green financing, has completed more than $10 billion in new green financing through the second quarter of 2017.

Fannie Mae’s multifamily Green Financing Program provides attractive mortgage financing to apartment building owners looking to finance their property while simultaneously installing energy and water efficiency improvements. The program also serves the multifamily market by integrating sustainability considerations into the underwriting, asset management and securitization processes. Ultimately, incorporating green building principles into property improvements enhances the nation’s overall quality of the existing multifamily housing stock.

We recently sat down with Michael Becker – Principal at SPI Advisory LLC and a Hunt Mortgage Group client – who recently closed a Fannie Mae green deal to hear why he decided to leverage this unique financing in Connect Media’s latest 3 CRE Q&A.

Q: Why did you decide to go with the Fannie Mae Green rewards program? What are the best features of the program and what are some expected outcomes?

A: We recently closed a supplemental loan under the Fannie Mae Green Program. We like this structure – it’s a “win/win” for everyone. We got a break on the interest rate, and then can funnel some of that savings into making the property more environmentally efficient. It also enabled us to save money on operations, and in turn, reduce tenant’s costs. The fact it’s good for the environment is an added benefit.

The best feature is a simple one: it allows us to make the property more efficient. The renovations we are implementing are smart. We are making changes that help conserve water and energy. It just makes good economic and environmental sense.

It is too soon to say exactly [the outcome] as we have just closed on our transaction. However, we are projecting a 27% reduction on water costs.

Q: What improvements were identified to qualify for the green rewards program?

A: For water cost reduction, we identified the need for new shower heads, aerators, and low-flow systems for the toilets. In addition, as we go through the renovations, we will repair any dripping or leaking faucets.

Q: Will you do more Fannie Mae Green Rewards financing?

A: Yes, we are actively looking to implement more Fannie Mae Green rewards for almost any transaction. Before the Green Program, some alternative financing may have made sense, but this definitely makes the financing attractive. Having a pricing break with a lower interest rate is a great start, but add in the entire process of smart renovations which benefits the building, the tenant and the environment and it’s a no-brainer.”

Read more at: Connect Media Commercial Real Estate 11292017