FS Energy to Make Energy-Efficiency Loans to Multifamily Properties

New York–FS Energy L.L.C., a subsidiary of residential property manager FirstService Corp., has partnered with two unnamed financial institutions to arrange for loans to residential buildings to make energy-oriented capital investments. The loans, which FS Energy says are the first of their kind to be made on a large scale, will be available to properties undergoing retrofits and renovations that improve energy efficiency.

These unsecured energy loans require no upfront investment, will feature below-market financing rates for qualified retrofit projects, and will be paid off entirely from the savings derived from the improvement. Because the loans are secured by an escrow of the energy savings, a mortgage doesn’t need to be recorded. According to FS Energy, the company will initially focus on loans for properties managed by FirstService’s New York City subsidiary, Cooper Square Realty Inc.

With loan terms longer than the projected payback period, FS Energy notes that energy savings will always exceed monthly loan payments of principal and interest, so that buildings will realize savings throughout the term of the loan. Once the loan is retired, the buildings will continue to profit from all future energy savings.

The loans are available for multifamily properties to finance conversions from Nos. 4 and 6 oils to cleaner-burning fuels. That’s important especially in New York, since in April the city enacted a new rule that will phase out consumption of these dirty heating oils, which are estimated to be responsible for more than 85 percent of the heating oil soot emissions in the city–more than all New York City cars and trucks combined.

Loans initially will be available in New York City but will be extended to other FirstService-managed properties in various U.S. markets later this year. The potential pool of properties that might benefit from the program is large, since FirstService Corp. manages about 4,600 properties representing 1.2 million units.

“FS Energy is in a unique position because of our size and our relationship with the management companies that run the properties,” David Kuperberg, CEO of Cooper Square Realty and FS Energy, tells MHN. “While it’s entirely possible that lenders will develop generic energy loan packages at some point in the future, energy savings are achievable now and our financing program is deliverable now. Waiting to implement energy savings projects just continues to waste money and pollute the environment.”