Generations Senior Living has secured an $82 million loan to refinance Paradise Village. The transaction represents Fannie Mae’s first Green Rewards loan backed by a seniors housing property.
Paradise Village is an independent living, assisted living, and memory care center located outside of San Diego. Walker & Dunlop, Inc., a commercial real estate finance company, structured the loan.
Fannie Mae’s Green Rewards program, part of the Fannie Mae Green Initiative, provides lower interest rates and up to 5% in additional loan proceeds, in addition to free energy and water audit reports to finance any energy efficient improvements. Generations Senior Living is in the process of installing a solar and battery pack system to enhance energy efficiency at the location.
The Fannie Mae Green Initiative provides owners of multifamily properties (rental or cooperative properties with 5 or more units) with valuable green financing solutions and tools to make smart energy- and water-saving property improvements. Its green financing programs include Green Rewards, Green Preservation Plus, and the Green Building Certification Pricing Break, all of which are eligible for a 10 basis points (0.1%) reduction in the all-in interest rate. Over the life of a 10-year $10 million loan, that could result in a savings of $95,000 or more in interest. All Fannie Mae green loans are securitized as Green Mortgage Backed Securities (Green MBS).
The Green Rewards product feature, launched in 2015, provides up to an additional 5% of loan proceeds by including up to 50% of projected energy and water savings in the loan underwriting. Conventional and affordable multifamily properties including cooperatives, seniors, military and student housing properties are eligible for the this product feature. The properties may be located anywhere in US and must be able to project a 20% minimum consumption savings in energy and/or water to qualify for a Green Rewards loan. The selected property upgrades must be completed within 12 months of loan closing.
The Green Preservation Plus program, launched in 2011, provides additional loan proceeds to Multifamily Affordable Housing (MAH) properties by allowing up to an 85% Loan-to-Value (LTV), lower Debt-Service-Credit-Ratio (DSCR) up to 5 basis points lower than standard rates, and access to property’s equity amount equal to investments in efficiency. Energy- and water-saving improvements must equal at least 5% of the original mortgage loan amount.
The Green Building Certification Pricing Break provides the 10 basis point pricing break to any acquisition or refinance loan on a conventional or affordable property that has a current, eligible Green Building Certification.
The 3rd Annual Environmental Leader & Energy Manager Conference takes place May 15 – 17, 2018 in Denver. Learn more here.