Multifamily Green Financing:Capturing the Benefits of the Triple Bottom LineWegoWise webinarOctober 27, 2016

© 2016 Fannie Mae. Trademarks of Fannie Mae. 2

Questions?

Submit at any time through GoToWebinar

© 2016 Fannie Mae. Trademarks of Fannie Mae. 3

Today’s Speakers

Karyn SperProgram Manager, Green Financing

Business, Fannie Mae

Dan TeagueVice President of Business Development, WegoWise

© 2016 Fannie Mae. Trademarks of Fannie Mae. 4

Fannie Mae Mission and Portfolio

Fannie Mae provides liquidity, stability, and affordability to the secondary mortgage market

Fannie Mae’s Multifamily provides financing for: Market Rate, Affordable, Seniors, Student, Military, Manufactured

Housing, and Cooperative properties Approximately 19% of all U.S. Multifamily Mortgage Debt

outstanding as of Q1 2016

Property Owner

DUS®

LenderFannie Mae Multifamily

MBS Investors

$

Loan

$

Mortgage

$

MBS

© 2016 Fannie Mae. Trademarks of Fannie Mae. 5

Our Green Financing Framework

Fannie Mae Multifamily Green Financing targets apositive, measureable impact to

each pillar of the Triple Bottom Line.

Financial• Lower credit risk

• Higher cash flows

• Higher property value

Social• Greater affordability for tenants

• Higher quality, more durable housing

• Healthier housing

Environmental• Lower use of energy, water, and

natural resources

• Greater resiliency to natural disasters

© 2016 Fannie Mae. Trademarks of Fannie Mae. 6

2012-2015

• Piloted Green Financing products• Launched Green MBS• Developed ENERGY STAR Score for

Multifamily with US EPA• Developed High Performance Building

Module scope

2016

Delivered $1.6B through

September 2016

Building the foundation for Multifamily Green Financing

© 2016 Fannie Mae. Trademarks of Fannie Mae. 7

Simplifying the Path to Green Financing

© 2016 Fannie Mae. Trademarks of Fannie Mae. 8

Green Rewards provides real financial value  Fannie Mae Green Rewards features

Pricing incentive Up to 39 bps off fixed rate conventional pricing

HPB (Energy and Water Audit) Report Cost 100% paid by Fannie Mae

Credit to Underwritten NCF (optional) 75% of owner projected cost savings and/or25% of tenant projected cost savings

Additional Loan Proceeds Up to additional 5%, subject to LTV constraints

Green Improvement Escrows Escrow capital for improvements generally at 100% of cost

Min. Green Improvement Budget/Unit None

Energy collection requirements for HPB 10% sampling of tenant data required only if underwriting tenant projected cost savings

© 2016 Fannie Mae. Trademarks of Fannie Mae. 9

Green Rewards Additional Terms

  Fannie Mae Green Rewards

Minimum Targeted Reduction 20% reduction in energy or water use

Eligibility Conventional, MAH, seniors, students, military, coop. MHC excluded.

Pricing Fixed and Variable Rate

DSCR / LTV Standard program requirements

High Performance Building Module Vendors Any vendor that meets Form 4099 requirements

Capital ImprovementsMust be completed within 12 month of loan close. Lender must include list in Repair Agreement.

Report Cost Reimbursement Loan must commit and deliver as Green Rewards for cost of HPB Report to be reimbursed

ENERGY STAR® Reporting Annual reporting of ENERGY STAR Score for life of loan

© 2016 Fannie Mae. Trademarks of Fannie Mae. 10

Ideal Fit for Green Rewards

Properties built 2002 and before

Value-add acquisitions

Capital investment at refinance

Master-metered and tenant sub-metered properties

Looking for extra proceeds and/or better pricing

© 2016 Fannie Mae. Trademarks of Fannie Mae. 11

Reducing water costs, accessing additional loan proceedsGreen Rewards Loan $22.8M, Refinance, Fixed Rate

Property 156 units, 1984 construction

Budget / unit $301

Improvements

Low-flow faucetsLow-flow showerheadsLow-flow toiletsDrip irrigationENERGY STAR® washing machines

Additional Loan Proceeds / Underwriting

$8,253 savings underwritten; 1% additional proceeds

Energy/Water Use Reduction 4% Energy, 20% Water

© 2016 Fannie Mae. Trademarks of Fannie Mae. 12

Making significant investments in central systems, accessing pricing and proceeds

Loan $5.6M, Refinance, Fixed Rate

Property 60 units, 1966 construction

Budget / unit $2,300

Improvements Replace heating plantReplace hot water boiler

Additional Loan Proceeds / Underwriting

$23,550 savings underwritten; 2.7% additional proceeds

Energy/Water Use Reduction 23% Energy, 0% Water

© 2016 Fannie Mae. Trademarks of Fannie Mae. 13

Access more loan proceeds by underwriting 75% of owner’s cost projection savings

Loan without Green Rewards Green Rewards

Total Property Projected Utility Savings $0 $40,000

Owner Credit to NCF $0 $30,000 (75%)NCF + % of Projected Savings $805,000 $835,000

   

DSCR 1.25 1.25

LTV 75% 77%

Value at 6% cap rate $13,420,000 $13,420,000   

Loan Amount $10,000,000 $10,372,000% Proceeds over Non-Green Loan   3.7%

Underwriting owner and/or tenant savings is optional.

© 2016 Fannie Mae. Trademarks of Fannie Mae. 14

Green Building Certification Pricing Break Available for any Fannie Mae Loan on a property

with a current, eligible Green Building Certification Conventional or Affordable, First lien or Supplemental No restriction on interest rate type, loan term, or loan

size Eligible Green Building Certifications: EarthCraft Multifamily

ENERGY STAR®

Enterprise Green Communities National Green Building Standard Green Globes

GreenPoint Rated LEED

© 2016 Fannie Mae. Trademarks of Fannie Mae. 15

Green Building Certification Pricing Break features Preferential pricing reduces the interest rate of most

loans Up to 39 bps off fixed rate conventional pricing

Accept internationally recognized certifications

…and more

Provide longest timeframe for certification to be delivered: not required until rate lock

No affordability is required to access the Green Building Certification Pricing Break

© 2016 Fannie Mae. Trademarks of Fannie Mae. 16

Measuring Energy Performance in Multifamily Housing Measuring energy performance challenging for

multifamily Difficulty of obtaining whole building data No nationwide data set available

ENERGY STAR®

Data set from 2012 Fannie Mae survey used by EPA to develop ENERGY STAR® 1-100 Score for Multifamily Housing

Recognized as a 2015 and 2016 ENERGY STAR® Partner of the Year in Energy Efficiency Program Delivery

Ongoing Reporting Define relationship between financial performance and energy

performance Annual energy performance reporting required from 1000+

properties All Green loans required to report annual energy performance

© 2016 Fannie Mae. Trademarks of Fannie Mae. 17

Additional Green Financing solutions

Green Preservation Plus: preserves quality Multifamily Affordable (MAH) housingo Features include 1.15 DSCR, up to 85% LTV, and

High Performance Building Report paid by Fannie Mae

o See Green Preservation Plus term sheet

C-PACE Consent: permits subordinated loans originated through Commercial Property Assessed Clean Energy programs

© 2016 Fannie Mae. Trademarks of Fannie Mae. 18

• Automated data collection • Building utility analytics• Multifamily benchmarking

1 Million Units

600 Utility Companies

1.5 Billion Square Feet

© 2016 Fannie Mae. Trademarks of Fannie Mae. 19

Benchmarking Data: Green Financing Compliance

Automated data collection

© 2016 Fannie Mae. Trademarks of Fannie Mae. 20

Q&ASubmit questions through GoToWebinar

Karyn SperProgram Manager, Green Financing

Business, Fannie Mae

Dan TeagueVice President of Business Development, WegoWise

© 2016 Fannie Mae. Trademarks of Fannie Mae. 21

Contact Information

Karyn SperProgram Manager, Multifamily Green Financing BusinessKaryn_Sper@Fanniemae.com

Dan TeagueVice President of Business DevelopmentDteague@WegoWise.com