A publication of Winter issue 2015 sponsored by CRE Finance World Winter 2015 11 track energy and water consumption, as well as greenhouse gas emissions, in commercial buildings. As of 2013, Portfolio Manager is the leading industry tool with more than 40 percent of commercial building space, or over 30 billion square feet, already benchmarked. Exhibit 3 Steady Growth in Building Space Benchmarked Cumulative square footage represents the unique building floor space benchmarked in Portfolio Manager. Building space benchmarked over multiple years is only counted once in the cumulative total. On September 16, 2014, the EPA launched the 1-100 ENERGY STAR score for existing multifamily properties in Portfolio Manager. This score will allow multifamily properties to compare energy consumption with similar properties nationwide. The benchmark peer group is comprised of nationally representative survey data. Additionally, the tool normalizes scores for things such as building activity, energy sources, and weather. Bottom line, ENERGY STAR Portfolio Manager provides a clear and simple score based on a scale of 1 to 100. The unbiased score allows interested parties to quickly understand how a building is performing in terms of energy consumption. A score of 50 represents median energy performance, while a score of 75 or better indicates that a building is a top performer and could qualify for ENERGY STAR certification. Portfolio Manager allows owners to be experts at operating their own properties and puts the emphasis on conserving energy. The rules are simple. To receive an ENERGY STAR score, users must enter data that accounts for all energy use for all fuel types in the whole building (regardless of who receives or pays the utility bills) for at least 12 full consecutive calendar months. For multifamily users, this could pose a challenge as tenants often pay utilities directly to the provider or in the case of a property acquisition, historical data may not be readily available. However, tides are turning. Both property owners as well as municipalities are investing in managing energy consumption, reducing costs, and protecting the environment. Already, cities such as Austin, Boston, Chicago, New York, Philadelphia, San Francisco, Seattle and Washington D.C. require energy consumption tracking and the leading tool of choice is EPA’s ENERGY STAR Portfolio Manager. With all of the benefits of managing energy consumption, stakeholders are driving change and influencing energy providers. Freddie Mac’s Response Freddie Mac considers it a good business strategy to encourage energy conservation. We are currently exploring ways to integrate this practice into our K-Securitization program which, since inception, has provided financing to approximately 4,700 multifamily properties. Today, roughly 80 percent of Freddie Mac’s mortgage purchases are funded through its K-Deal Agency CMBS program. Specifically, we are currently exploring methods of tracking energy usage at multifamily properties using EPA’s ENERGY STAR Portfolio Manager. Eventually, Freddie Mac hopes to encourage multifamily properties to be more energy efficient by tracking their “Green Score,” and even possibly to influence the broader CMBS market by reporting a weighted average Green Score in our K-Deal program. Doing so would provide a clear, simple rating of energy conservation to investors and attract investors looking to deploy funds into green investments. Freddie Mac aims to encourage heightened awareness of energy conservation throughout the commercial mortgage market and develop a transparent, industry standard Green Score for investors. The goal is to make energy tracking and conservation part of the status quo. Being energy conscious and environmentally friendly supports future stability, growth and profitability. This ultimately leads to happy, healthy homes. It makes sense for us, borrowers, it makes sense for us and it makes sense for the market overall. 1 SmartMarket Report. McGraw Hill Construction Report 2014: Green Multifamily and Single Family Homes: Growth in a Recovering Market. https://analyticsstore.construction.com/index.php/downloadable/download/ link/id/MC45MjQ1NzkwMCAxNDExMDA0MjI3MTY3NzYxNzA1Njk5MTQ5/ It’s Not Easy Being Green. . . Or Is It?
CREFW-Winter Edition
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