Freddie Mac To Offer Bonds Supporting Housing for the Intellectually and Developmentally Disabled

Freddie Mac Multifamily announced that it will go to market with the issuance of $230 million in social bonds supporting 1,267 rental homes across 39 states and the District of Columbia for individuals with intellectual and developmental disabilities.

The proceeds from these social bonds help fund community-based homes critical to the “deinstitutionalization” of care for individuals with disabilities, according to the GSE. The properties provide 4,462 beds, approximately 90% being affordable to people making 50% of the area median income. 

“Freddie Mac Multifamily is incredibly proud to bring our first Social Bonds transaction to market providing housing for individuals with intellectual and developmental disabilities,” said Robert Koontz, senior vice president of Capital Markets for Freddie Mac Multifamily, in a prepared statement. “This transaction represents our commitment to ensuring safe, affordable housing that meets the needs of the community it serves. Our Impact Bonds, and specifically the Social Bonds framework, encourage innovation to provide solutions that meet the unique needs of underserved communities.”

The proceeds of Freddie Mac’s Social Bonds are used either to provide liquidity to social impact financial institutions for financing of affordable housing or to finance multifamily properties originated by the Freddie Mac Multifamily Optigo network that are affordable to an underserved population.

If an institution receives liquidity and has properties financed from social bonds, it is expected to foster various socioeconomic opportunities for residents and their communities. In addition, they should provide affordable housing to low- to moderate-income families.

Freddie Mac Multifamily has successfully introduced similar programs. For example, in April, it announced that it issued more than $5 billion in green, social and sustainability bonds in 2020 through its Impact Bond series for the asset class.

Of that amount, $3.3 billion were allocated toward green bonds in 2020, with $874 million in social bonds and $971 million in sustainability bonds issued through year’s end.

The green bonds are focused on making efficiency improvements to workforce housing, with tenants expected to save an average of $261 per unit annually through lower utility costs. Associated water improvements are expected to save more than 370 million gallons of water per year, equal to the amount used by 4,000 households, while energy reductions are projected to save 260 million kBtu per year, enough energy to power 7,200 homes.