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SAN DIEGO—GlobeSt.com has learned exclusively that NorthMarq Capital has arranged a $61.2-million loan to a private family office for the refinance of three garden-apartment complexes in San Diego totaling 488 units. The loan will go toward making improvements to reduce energy usage at the properties.

The three apartment projects are Countryside Apartments at 12556 Oak Knoll Rd. in Poway, Penasquitos Point Apartments at 12760 Rancho Penasquitos Blvd. in San Diego and Comanche Hills Apartments at 5040 Comanche Dr. in La Mesa. Gardiner Champlin and Marty Meagher, SVPs in NorthMarq's San Diego office, arranged the transaction, which was structured with a 12-year, interest-only term.

The financing was arranged through Fannie Mae's Green Rewards program, which allowed the deal to lock at a spread 39 basis points below a comparable conventional deal. According to Champlin, “The financing took advantage of a reduced interest-rate incentive under Fannie Mae's Green Rewards program based on the sponsor's commitment to make property improvements to reduce energy usage at the properties. The sponsor achieved a significant cash-out even at the Tier 4 financing level, while reducing monthly loan payments due to a significant drop in interest rate from the prior loans paid off with this refinance.”

Fannie Mae's “Green Rewards” financing program allows financing firms to fund borrowers' planned energy- and water utility-saving improvements and achieve lower interest rate pricing. As Phyllis Klein, VP of multifamily customer engagement for Fannie Mae, told GlobeSt.com in October 2016, “Green Rewards enhances any Fannie Mae loan—conventional, affordable, students, seniors and co-ops—by allowing the owner to access additional loan proceeds to finance energy- and water-saving property improvements. The product allows the lender to underwrite a portion of savings from those improvements, providing better pricing and more loan proceeds for the borrower, quality housing and greater affordability for the owner and the tenants and a lowered impact on the environment. Another innovation is that these loans are securitized as 'Green MBS,' allowing us to reach a broader investor market that wants environmentally sustainable securities.”