Fannie Mae, on February 6, 2015, announced it will offer lowerinterest rates on loans made on certified energy efficientmultifamily buildings. In an effort to further incentivize propertyowners to improve the energy performance, and therefore the qualityand affordability of multifamily housing, Fannie will grant a 10basis point reduction in the interest rate of a multifamilyrefinance, acquisition or supplemental mortgage loans. To qualify,properties must be certified under LEED, EPA's Energy Star or Enterprise's GreenCommunities criteria. Fannie Mae will securitize all loans financedunder this lower interest rate as Green Bonds, which will be anattractive option for socially responsible investors to expandtheir portfolios.

This new program would cut a 4% market interest rate to 3.9%.The savings are significant: interest payments for a qualifying30-year $10m loan would be reduced by $95,0000 over a 10 year term.The incentive applies to new and existing buildings, and is a partof Fannie's Multifamily Green Initiative that “providesfinancing to invest in energy and water-cost saving improvementsthat lower utility costs, improve the quality of housing and lowerrisk.” The new mortgage discount is expected to encourage a hugenumber of multifamily owners to not only build green, but to investin retro-commissioning of existing buildings in order to qualifyfor the price cut.

Building Green Is Getting Easier andCheaper
Fannie's new program is just one more financial motivation formultifamily owners to pursue energy efficiency and greencertifications for their buildings. There are an increasing numberof green building and energy disclosure regulations, market forcesare starting to reward sustainability and numerous funding and rebates programs areavailable that offset the costs associated with implementing energyefficiency measures to the extent that they often pay forthemselves. As a result, more and more commercial property ownersare opting to invest in measures to obtain LEED, Energy Star orother certifications that recognize buildings that are designed,maintained and operated to be highly energy efficient and promoterenewable energy.