Los Angeles-based RW Selby has signed a $116 million loan for eco-friendly renovations at its Heights Apartments in L.A., according to an announcement by Walker & Dunlop, which arranged the financing for the deal.
Fannie Mae will provide the loan through its Green Rewards program, which offers higher available balances and more generous interest rates to borrowers who improve energy and water efficiency at their properties.
Representatives for RW Selby were not immediately available to describe the renovations planned for the property at 7077 Alvern Street. On its website, Fannie Mae wrote that qualifying improvements might include “installing water-saving irrigation systems, improving insulation [and] making other energy- and water-saving improvements.”
The approximately 10-acre development includes 582 one- and two-bedroom garden apartments. On its website, RW Selby touts the property’s site, along Interstate 405 just northwest of Inglewood, as being “just minutes from beaches, restaurants, entertainment, freeways and shopping.” It also features two “resort style” pools and spas among other amenities, along with the complex’s verdant landscaping.
Chrissa Pagitsas, the director of Fannie Mae’s green-financing business, said that the Green Rewards program both accords with the agency’s public-service mission and bolsters borrowers’ creditworthiness.
“Fannie Mae is in the business for affordable, quality housing. Affordable means less expensive for renters, and also more affordable for owners to operate,” Pagitsas said. Property owners who use Green Rewards loans to fund renovations save an average of $53,000 per year on operating expenses, she said, and tenants save 10 percent on their utility bills.
California property managers’ role in water conservation was hotly debated during the state’s six-year drought that ended in April. An order issued by Gov. Jerry Brown in 2015 prohibited developers from irrigating new projects with large amounts of potable water.
“The idea of your nice little green grass getting lots of water every day, that’s going to be a thing of the past,” the governor said at the time.
Donald King, an executive vice president at Walker & Dunlop, said that property managers are pleased to find that seemingly minor upgrades to infrastructure can add up to the 20% efficiency improvements the loan program requires.
“You’re talking about low-flow faucets and toilets for water savings. You’re talking about energy efficient appliances when you’re doing appliance upgrades. And you’re talking about more efficient lighting,” King told Commercial Observer. “In most cases, those types of things alone are able to generate more than 20 percent in savings.”
Often, tenants reap the benefits too, in the form of lower utility bills, according to King.