ING launches green building incentive program

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Stuart Miller from Lennar with Maddox Complex (Lennar, LMC)

Stuart Miller from Lennar with Maddox Complex (Lennar, LMC)

It seems that every major real estate firm turns greenbut some of these efforts have seen the color red.

Landlords are aiming for zero emissions to attract investors and environmentally conscious millennials, but when it comes to securing funding for upgrades, options are limited.

The latest player in the credit market was ING, a global financial giant. A Dutch banking firm is launching a “green building incentive” loan that finances energy-efficient retrofits for multi-family and commercial buildings. The company hopes that the favorable rates of the program will encourage existing building owners to upgrade to save energy.

Now he is.

Subsidiary of the housing giant Lennar received the program’s first loan, a $ 33 million debt package to modernize its newly built apartment complex outside of Houston. Improvements to the Maddox complex in Katy, Texas are expected to help Lennar achieve energy efficiency certification from American National Standards Institute

The interest rate on an ING loan is slightly lower than on a traditional loan. The rate is reduced even more when the developer obtains an energy efficiency certificate after the completion of the retrofit or upgrade. According to ING, the loan also provides additional proceeds to cover the costs of these upgrades.

Craig Bender, Head of Commercial Real Estate Finance in America, ING

Craig Bender, Head of Commercial Real Estate Finance America, ING (LinkedIn)

“We are not cutting prices by 20 or 30 percent, but it makes sense if you take the price for three to seven years,” said Craig Bender, head of CRE America funding at ING. He did not disclose interest rates on stimulus loans for green construction.

Lennar’s financial deal with ING and other firms allows the developer to “expand our current [environmental, social, and governance] initiatives to reduce emissions, ”said Christina Langrall of Lennar Multifamily Communities.

ING is currently working with a developer in New York on a building loan under the Green Initiative.

“As a bank, it’s hard to find its place in the ESG world,” Bender said.

One of the demand drivers may be green programs from Fannie Mae and Freddie Mac. Government-supported lenders require borrowers to obtain environmental certifications for projects in order to ensure continued long-term funding for certain programs.

The role of real estate in climate change is becoming more and more important.

Buildings account for about 70 percent of all greenhouse gas emissions in the city’s five boroughs, according to a New York City Hall report. To lower this level, the city required larger commercial buildings cut their carbon emissions increase dramatically over the next 30 years.

To help landlords achieve these goals, a new financing instrument provides lower rates for owners who are taking energy efficiency measures. A program called C-PACE requires senior lender consent, which can be difficult to obtain.

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