Fannie Mae issuance of green multifamily securities tops $100 billion

Fannie Mae’s total issuance of green multifamily mortgage-backed securities cleared a key milestone in November when the volume rose above $100 billion for the first time, according to the government-sponsored enterprise.

New securitizations of loans on energy-efficient rental housing totalled $12.7 billion during the first 11 months of this year, suggesting 2021’s total will come close to matching 2020’s $13 billion.

While Fannie’s annual issuance in this category has varied over the years, depending on regulatory quotas related to the multifamily cap, it’s been able to build up to this milestone because it’s brought these bonds to market each year since the program was launched in 2012.

“We never took our foot off the gas and we have been committed to green since we started looking at this over 10 years ago,” said Michele Evans, executive vice president and head of Fannie Mae’s multifamily division, in an interview. “We never stopped trying to price this business appropriately to bring [borrowers] in.”

With domestic investors showing a growing interest in environmental, social and governance bonds over the past 18 months, Fannie currently expects to continue issuing around $10 billion to $13 billion annually for the foreseeable future.

“The same education that we launched with our borrowers in the 2016, 2017, 2018 timeframe we are now in the process of doing the same on the investor front,” said Lisa Bozzelli, director of multifamily capital markets at Fannie Mae. “So many of our regular buyers are developing ESG funds, requirements or interests.”

While that market has been diversifying in response to the new demand, the new milestone highlights the fact that Fannie’s original green multifamily program has depth and diversification that others might not have. Fannie has issued bonds of this type in 47 out of 50 states, according to its latest report.

Fannie’s green bond program is aimed at incentivizing borrowers to finance energy or water efficiencies that will benefit tenants. Going forward, other types of projects that could come more into focus are solar power and emission reduction projects, Bozzelli said.

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