CASE STUDY

Premier Gear Seismic Upgrade

PropertyFit financing enabled seismic retrofit as part of major redevelopment

Background

Sturgeon Development Partners used PropertyFit commercial property assessed clean energy (CPACE) financing to quickly implement a seismic retrofit as part of the adaptive reuse project on the Premier Gear Building in Portland, OR. The project transformed the industrial building into mixed-use creative class A office and retail space while improving the building’s seismic resiliency.

Project Overview

The Premier Gear Building—located one mile northwest of downtown Portland’s central business core—was built in 1944 and operated asa single-tenant industrial building until its acquisition by Sturgeon Development Group in 2017. Sturgeon Development planned a$26M redevelopment of the property to transform it into 65,000sq. ft. of leasable class A office space with an additional 2,000 sq. ft. of ground floor retail. Part of the redevelopment plan includes a seismic retrofit to comply with local codes that require buildings with increases in total occupancy to meet seismic improvement standards. Sturgeon Development wanted to offer future tenants maximum space flexibility with the ability to host large events, which required a significant investment in order to meet the high standards.

“We were evaluating a range of financing options for this major renovation. The more we dug in, the more we realized that PropertyFit CPACE financing provided by PACE Loan Group was an excellent way to replace high-leverage debt and lower our blended cost of capital.”

Nick Fritel, CFO, Sturgeon Development"

After exploring different financing options, Sturgeon Development chose to finance the seismic improvements using PropertyFit. The $3M commercial PACE loan provided by PACE Loan Group enabled the team to move forward with the project quickly and at a lower overall cost than other debt financing options. PropertyFit financing altered the makeup of the project’s capital stack by replacing expensive debt with 25-year, fully amortized financing—reducing the blended cost of capital for the project.

The improvements installed through PropertyFit financing include a timber framed second floor, concrete masonry shear walls, steel buckling restrained braced frames, and other seismic improvements that increase earthquake resistance and minimize the impact to building productivity, building-use, and business operation if an earthquake were to occur. In addition to creating a safer property, these improvements increase the value of the Premier Gear Building and allow for greater marketability to potential tenants.