Earlier this week, Freddie Mac released a new green financing offering known as the Multifamily Green Advantage℠. This offering aims to provide a “flexible, cost-effective” option to finance resource-efficient multifamily properties by offering discounted loan pricing to borrowers who commit to assessing or improving the asset’s energy or water performance. To be eligible for the Green Advantage, borrowers must perform a Green Assessment to identify specific energy efficiency and water conservation measures. Based on the findings of this assessment, discounted interest rates and additional loan proceeds will be provided to borrowers. Freddie Mac will reimburse the borrower up to $3,500 for the cost of the assessment used for the approved loan.
Program Specifics
Borrowers may choose one of two paths with the Multifamily Green Advantage offering: Green Up or Green Up Plus (see here). The Green Up option requires borrowers to order a Green Assessment, which is a straight-forward property analysis that identifies energy and water conservation measures. Borrowers who commit to making improvements based on the findings of this assessment are eligible to increase their loan amount, as Freddie Mac will underwrite up to 50% of the projected owner-paid cost savings.
With the Green Up Plus option, borrowers are required to order a Green Assessment Plus, which is a more detailed property analysis based on an ASHRAE Level II Energy Audit. Freddie Mac will underwrite up to 75% of the projected owner-paid cost savings for borrowers who commit to implementing measures identified in the report.
Both options require the implementation of measures that reduce owner-paid energy or water consumption by at least 15% and give borrowers up to two years to complete the improvements. Both options also include energy benchmarking requirements, which require property energy and water usage be recorded in the EPA Portfolio Manager® before closing, as well as annually until two years after the project is completed.
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