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GSEs Incentivize Landlords to Go Green

Differences in the two programs aside, borrowers stand to gain, no matter if they choose Freddie or Fannie, with cutbacks on debt service and utility savings and gains for the environment.

By John Salustri | Updated on November 28, 2017
Duvall: “The reduction in debt service more than pays for the upfront costs over a period of only a couple of years.”

MINNEAPOLIS—The world’s going green, and smart investors, developers and tenants are all painting with the same broad paintbrush. So are capital sources and loan servicers, according to Greg Duvall, SVP/managing director, NorthMarq Capital‘s Kansas City office.

Specifically, Duvall points to Fannie Mae and Freddie Mac, as those two GSEs incentivize borrowers to take advantage of the environmental gains and the cost reductions of their green lending programs. For Freddie, that initiative is dubbed Green Advantage. For Fannie, it’s Green Rewards. Whatever the name, the GSEs are, “promoting sustainability for the right reason,” he says, “to encourage people to be environmentally friendly. It’s a mandate that comes from their regulator.”

And the GSEs themselves are incentivized to follow that mandate. “Green loans are excluded from their caps,” he says, a fact that’s good for lender and borrower. “They pass the pricing benefits on to borrowers, and, in turn, incentivize them.”

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