Freddie Mac Eyes "Green Securities" for MF

Freddie Mac headquarters

MCLEAN, VA-Freddie Mac is considering either introducing some kind of green or sustainable multifamily security this year, or more likely, scoring its K-deals for their “greenness.” The GSE and the US Environmental Protection Agency’s Energy Star program have signed an agreement under which multifamily properties will cut carbon pollution by making it easier to secure financing for energy-efficient investments and Freddie Mac is hoping the program will deliver enough data to support its aspirations for green multifamily securitization.

Once the partnership with EPA is off the ground the GSE will consider greening its K-deals or even marketing a stand-alone green security, David Brickman, SVP of Multifamily tells “Whether we would do a green security or give a security a green score is something we are talking about. We are very much looking at providing some green indicator or label to our securities.”

This is something that could roll out this year, he adds.

There are some issues that need to be addressed, he also notes, such as how the properties’ individual scores would translate into one score for the security. But the exercise would be worthwhile, he says, as it appears the demand for these securities exist in the market. “We dont think there is a downside to trying it out. How much we get rewarded in the capital markets remains to be seen.”

Under the MOU with the Energy Department, Freddie Mac will collect energy and water performance data from property owners during the loan underwriting and asset management processes. It then hopes to be able “to influence lending practices in ways that encourage investments in energy efficiency and make multifamily housing units more affordable,” as it explained in its announcement. EPA will assist Freddie Mac by providing technical and educational support.

A prepared statement by Mitchell Resnick, Freddie Mac Multifamily’s vice president of loan pricing and securitization, suggest more moves are in the offing. “[W]e are looking to guide the industry and the CMBS market towards a greater sensitivity to environmentally responsible lending and investing. This partnership is the first of what we hope are many steps in that direction.”

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