NEW YORK, June 21, 2021
NEW YORK, June 21, 2021 /PRNewswire/ -- ING Capital LLC has closed a $33MM Green Incentive loan – a cutting edge sustainable finance product – with LMC, a wholly owned subsidiary of Lennar Corporation, and a leader in apartment development and management. The loan is secured by The Maddox, a newly built and recently stabilized high-quality multifamily apartment community in Katy, Texas outside of Houston.
The Green Incentive Loan is structured in line with the Green Loan Principles issued by the Loan Market Association ("LMA"), the Loan Syndications and Trading Association ("LSTA") and the Asia Pacific Loan Market Association ("APLMA"). It is unique in that it contains financial incentives for LMC to pursue a green certification for the property. The incentives, which can differ from transaction to transaction, for The Maddox include:
- A reduction in interest margin upon the Borrower's commitment toward initiating a green certification process for the asset
- An additional reduction in interest margin upon the borrower obtaining green certification in line with best market practices
- An earnout of loan proceeds upon Borrower obtaining green certification, which exclusively reimbursed the Borrower for the costs associated with the certification requirements.
"Sustainability is a priority for LMC and collaborations with organizations like ING allows us to expand our current ESG initiatives to lower building emissions and deliver green living experiences to our residents," said Christina Langrall, VP of Investments for LMC. "We are proud to work with ING and will leverage the proceeds from this loan to enhance The Maddox with healthy and environmentally responsible practices as we pursue the National Green Building Standard (NGBS) Silver certification."
Forty percent of all carbon emissions in the United States come from residential or commercial buildings, according to a 2018 estimate from the U.S. Energy Information Administration ("EIA"). ING developed this sustainable finance product to incentivize building owners to invest in green projects and help them to meet their own sustainability goals. ING believes that this Green Incentive Loan is one of the first, if not the first time that a US balance sheet lender has structured a green loan which includes a clear financial incentive for Borrowers to upgrade and improve the sustainability of their real estate assets. Although similar facilities with financial incentives have been provided at the corporate or fund levels, the inclusion of financial incentives combined with green use of proceeds at the asset level is unique.
"We are excited to have partnered with one of our key clients LMC on this new, innovative loan structure," said Craig Bender, ING's head of commercial real estate financing in the Americas. "Providing financial incentives to our clients to improve the sustainability of their assets is consistent with ING's core belief that it has a responsibility to steer its loan book towards meeting the Paris Agreement's climate change goals. If at the same time we can also help our clients achieve their own sustainability goals it is truly a win-win proposition."
"ING hopes to offer the Green Incentive Loan to more of our clients in the US over the coming months," Bender said. "We are already in advanced discussions with a client who is interested in this structure for a large construction loan in the New York area."
ING Capital Profile
ING Capital LLC is an indirect U.S. subsidiary of ING Group N.V., a global financial services company with a network spanning 40 countries. ING Group has 51,000 employees helping its 36.9 million customer base manage their money and meet financial goals. ING, in the US, offers a full array of wholesale financial products, such as commercial lending, and a full range of financial markets products and services through ING Financial Holdings Corporation, and its affiliates.
LMC, a wholly owned subsidiary of Lennar (NYSE:LEN, Financial), is a multifamily real estate development and operating company with a diverse portfolio of institutional quality multifamily rental communities across the US. LMC has a 31,800-unit pipeline of communities ranging from operating to under predevelopment that exceeds $12 billion of high-rise, mid-rise and garden apartments.
LMC creates extraordinary communities where people can live remarkably.
Jon Brubaker, Cognito
LMC media contact:
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SOURCE ING Capital LLC