Harbor Group Invests in Freddie Mac's ESG Bond Pool
By purchasing the bonds, Harbor is investing in underlying mortgage loans on housing that is affordable to the majority of low- to middle-income households.
Harbor Group International has invested in the Freddie Mac FREMF 2021-KG05 bond pool, part of Freddie Mac’s KG-Deal offerings. The bonds are part of the environmental and social impact series of the Freddie Mac Multifamily Loan, or K-Deal, program, and wholly comprises workforce housing loans.
By purchasing the bonds, Harbor is investing in underlying mortgage loans on housing that is affordable to the majority of low- to middle-income households. Firms that borrow from the KG05 pool must commit to substantially reducing energy or water and sewer consumption. Also, they must report water and energy efficiency performance data through a third-party benchmarking consultant.
The properties in KG05 conform to guidelines for Freddie Mac’s Green Advantage Loan Program, which aims to lower the carbon footprint of older workforce housing communities and reduce the utility expenses of low-income residents through increased efficiencies. With the program, borrowers who improve their workforce housing communities’ water and energy efficiency can earn adjusted rates.
“Harbor Group International has long understood the importance of sustainable investment strategies and assessing the social and environmental impact of our investments,” said Richard Litton, HGI, in a prepared statement. “We are thrilled to provide green investment opportunities to our investors through our continued relationship with Freddie Mac amid growing demand for ESG investment options.”
Sustainability is important to HGI. It has been recognized as an ENERGY STAR Top Performer and by the BOMA 360 Performance Program.
Other firms are also stepping up with investments to boost affordability and sustainability, through different channels and platforms. In February, JPMorgan Chase & Co. issued $1 billion in inaugural social bonds, which are expected to fund affordable housing projects. The fixed-to-floating rate notes are due in 2025.
Expect other companies to address environmental issues. Under the new Biden administration, sustainability will become a priority, which will trickle down to the CRE community. “Biden is sending a signal to the global community and to fellow Americans that the US is once again going to get serious about climate action,” Jennifer Hill, Global Product Owner, Sustainability Integration, JLL, said in a post on the company’s site.
Hill says it’s best to assume regulations will be harmful to the industry but that incentives for both companies and landlords greening their buildings could be helpful.