Recognizing the Benefits of Energy Efficiency in Multifamily Underwriting addresses a key bottleneck for private capital flowing to the sector: The lack of confidence in projecting energy savings against which lenders can underwrite loans.
The report also sets out a blueprint for incorporating energy savings projections into underwriting practices, Deutsche says.
A research team composed of Steven Winter Associates and HR&A Advisors was retained by the Deutsche Bank Americas Foundation with support from philanthropic collaborative Living Cities. The team aggregated and analyzed a data set of 230 affordable multifamily housing projects that had undergone energy efficiency retrofits in New York City. This data set, comprising 21,000 units, is the most comprehensive of its kind, says Deutsche Bank.
The authors found that energy savings across the building portfolio examined were real, and that the fuel savings (19 percent across the portfolio) were more predictable and of greater magnitude than electricity savings.
The study also suggests an underwriting methodology that would allow lenders to compare an auditor’s savings projections for a particular building with empirical data from past retrofits, to assess whether the auditor’s projections should be discounted when making an energy efficiency loan.