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December 12, 2018

We’re Green: from Origination to Securitization

Robert Koontz
Article By
Robert Koontz, SVP Multifamily Capital Markets

Increasingly, energy and water savings are bolstering the bottom line of multifamily property owners and their tenants’ budgets — and the Freddie Mac Multifamily Green Advantage® program has made this more and more possible.

We launched Green Advantage two years ago. Since then, we’ve securitized over $33 billion of green loans and offered better pricing and financing to over 1,100 Borrowers.

K Deals Gone Green

A key to the Green Advantage program’s growth has been the ability to access private capital and successfully integrate green loans into our K Series securitizations.

Since January 2017, over 1,200 green loans have been securitized through K Deals. The majority of these are backed by 7- and 10-year fixed- or floating-rate loans and touch most of our loan offering portfolio, including Seniors Housing and Workforce Housing loans.

The chart below highlights the growth in Green Advantage loans that are securitized into our 10-year fixed-rate K Deals. Over the past 21 months, the percentage has nearly doubled and, with the recent closings, currently averages around 40 percent for these types of transactions.

 

Case Study

Let’s take a closer look at a recent K Deal that included Green Advantage loans. K-85 closed on December 10 and provided water and/or energy efficient amenities to over 7,000 households. More than 30 Investors participated in the deal.

 

Sound Rationale and Real Benefits

Not only is green lending beneficial to reducing our environmental footprint, it also makes good business sense. With Green Advantage, Borrowers commit to reduce their energy or water consumption and get a pricing advantage. Across all loans, water improvements are projected to save 3.6 billion gallons in water per year – enough to run 119 million loads of laundry. And energy improvements save 1.478 billion kBtu annually, which equates to the power of running 40,000 homes or 8,600 football stadiums.

And environmentally friendly housing is increasingly important to renters. On average, the projected per-unit annual savings is $220, meaning that renters may also benefit from lower utility bills and a reduced cost of living.

Green Advantage is an important part of our commitment to our communities and business partners. To learn more, please contact our team or read our recent report on Green Improvements in Workforce Housing.

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