NEW YORK, June 21, 2021 / PRNewswire / – ING Capital LLC has signed a $ 33 million green incentive loan with LMC, a wholly owned subsidiary of Lennar Corporation and a leader in home development and management, an innovative sustainable finance product. The loan is secured by The Maddox, a newly built and recently stabilized high quality apartment building in Katy, Texas outside of Houston.
The Green Incentive Loan is structured in accordance with the Green Loan Principles of 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 includes financial incentives for LMC to seek green certification for the property. Incentives for The Maddox, which may vary from transaction to transaction, include:
- A decrease in the interest margin on the borrower’s commitment to initiate a green certification process on the asset
- An additional reduction in the interest margin if the borrower receives green certification according to best market practice
- An earn-out of the loan proceeds upon receipt of the green certification by the borrower, which only reimburses the borrower for the costs associated with the certification requirements.
“Sustainability is a priority for LMC and working with organizations like ING enables us to expand our current ESG initiatives to reduce building emissions and deliver greener living experiences to our residents,” said Christina Langrall, VP of Investments at LMC. “We are proud to partner with ING and will use the proceeds of this loan to improve The Maddox with healthy and environmentally sound practices as we pursue Silver National Green Building Standard (NGBS) certification.”
Forty percent of all CO2 emissions in The United States According to an estimate by the US Energy Information Administration (“EIA”) from 2018, they come from residential or commercial buildings. ING has developed this sustainable finance product to motivate building owners to invest in green projects and to help them achieve their own sustainability goals. ING believes this Green Incentive Loan is one of the first, if not the first, time a U.S. balance sheet lender has structured a green loan that includes a clear financial incentive for borrowers to upgrade and improve the sustainability of their real estate assets . Although similar facilities have been provided with financial incentives at the company or fund level, the inclusion of financial incentives combined with an environmentally friendly use of the proceeds at the asset level is unique.
“We are delighted to have worked with one of our key customers, LMC, on this new, innovative credit structure,” said Craig Bender, Head of Commercial Real Estate Finance at ING in North and South America. “Providing financial incentives to our clients to improve the sustainability of their assets is in line with ING’s core belief that it has a responsibility to manage its loan book to meet the Paris Agreement climate targets. If we can also help our customers to achieve their own sustainability goals at the same time, it is a real win-win situation. “
“ING hopes to be able to offer the Green Incentive Loan to more of our US customers in the coming months,” said Bender. “We are already in advanced talks with a customer who is interested in a large construction loan for this structure new York Area.”
ING capital profile
ING Capital LLC is a US indirect subsidiary of ING Group NV, a global financial services company with a network in 40 countries. ING Group has 51,000 employees helping its 36.9 million customer base manage their money and meet financial goals. ING provides a full line of wholesale financial products, such as commercial loans, and a full range of financial market products and services in the United States through ING Financial Holdings Corporation and its affiliates.
LMC, a wholly-owned subsidiary of Lennar (NYSE: LEN), is a multi-family real estate development and operating company with a diverse portfolio of institutional-grade multi-family rental communities in the United States. LMC has a 31,800 unit pipeline of communities ranging from operations to pre-development and more than $ 12 billion of high, medium and garden apartments.
LMC creates extraordinary communities where people can live in remarkable ways.
Jon Brubaker, Cognito
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SOURCE ING Capital LLC