New Cap, Same Commitment

Last month, the Federal Housing Finance Agency (FHFA) announced the 2021 multifamily volume cap of $70 billion each for Freddie Mac and Fannie Mae. This included a requirement that half our lending volume fall into a new definition for “mission-driven”, which focuses on affordable housing.

Affordability has always been key to our mission — along with liquidity and stability — and these new requirements are consistent with the loan business we’ve done in the past. But more important to investors, it’s consistent with our commitment to provide impact securities options that help investors reach their goals for environmental, social and sustainable impact.

Where Mission Meets Investment

While this year’s 50% affordability requirement for volume is a slight change, for securitization purposes, it simply serves to reinforce our ongoing initiatives. Below is a snapshot of our financing through October 2020, which shows our history of supporting affordable housing as a percentage of units funded at 80% area median income (AMI) or less each year. As this work continues, our current offerings will remain consistent and we will build on them as planned.

* The above chart is a measure of units, whereas the mission-driven calculations are based on proceeds.

Sustainable and Social Impact

This year was only the beginning of our Impact Bonds journey and we will move forward on the same path.

• Green Bonds (K-G Deals) will continue to fall under mission because our Green Advantage® program exclusively funds workforce housing. Overall, the K-G Series is primarily composed of properties affordable at 80% of AMI.
• Sustainability Bonds (K-SG and ML-Deals) are predominantly composed of NOAH and Targeted Affordable Housing loans, therefore they closely represent our 80% AMI goals, as well as financing more affordable loans.
• Social Bonds (various series) are our deeply affordable loans with an additional layer of social impact characteristics and will help us exceed the established 80% AMI mission goals.

Because our mission is woven into everything we do, the new rule and requirements present no need to pivot.

This year, we have securitized $1.2 billion in Green Bonds, $1.0 billion in Sustainability Bonds and $0.9 billion in Social Bonds. We intend to issue around the same amount or more of Impact Bonds in 2021. Check our Impact Bonds issuance calendar for the forward-looking pipeline.

What Next Year Will Bring

The effects of the pandemic on global economies and markets will continue to evolve, but our commitment to Optigo® investors remains strong. The strength of our platform lies in coming together and working through the complexities, providing stability and liquidity through all markets.

We will double down on what we do best: providing industry-leading commercial mortgage-backed securities, including forward-thinking offerings for investors wanting to “do well while doing good.” We will also continue to provide strong insights through our original research and modeling, which grows more robust each month. Look forward to a lot more, including the 2021 Impact Reports on our progress.

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