Fannie Mae has priced its first resecuritization of multifamily mortgages on energy-efficient buildings.
The $1 billion FNA 2017-M2, which priced Wednesday morning, is Fannie Mae’s second GeMS REMIC of the year. It included two tranches that are backed by 30 loans originated under Fannie Mae’s green program and individually securitized.
It’s another sign that the financing of energy efficiency is moving into the mainstream of the capital markets.
Fannie Mae began offering loans that help owners of older apartment buildings make upgrades in 2012; it started securitizing the individual loans shortly thereafter. In 2016, the government-sponsored enterprise issued $3.5 billion of green multifamily mortgage bonds. That’s still a small portion of its multifamily MBS, which totaled $55 billion last year. But it’s now feasible to include the green MBS in resecuritizations, which are running at $1 billion a month or so.
“The M2 represents one more step in Fannie Mae’s journey to realize social, environmental and financial benefits through its innovative financial tools and business strategy,” Chrissa Pagitsas, Fannie Mae’s director of multifamily green financing business, said in a press release.
She said the collateral included both loans secured by buildings with a green certification such as LEED, Energy Star, or Green Globes, as well as loans financing improvement intended to reduce a buildings’ energy or water consumption by 20% or more.
“The end result will be better quality housing with a lower environmental impact and positive cash flows,” Pagitsas said.
Josh Seiff, Fannie Mae’s vice president of capital markets and trading, said in the same press release that a number of new investors who focus on green and socially responsible investing participated in the deal.
All classes of FNA 2017-M2 are guaranteed by Fannie Mae with respect to the full and timely payment of interest and principal.