CASE STUDY

KEX Hostel Energy & Seismic Upgrade

PropertyFit financing funded energy efficiency and seismic retrofit as part of redevelopment

Background

Green Light Development used PropertyFit commercial property assessed clean energy (CPACE) financing to implement energy efficiency and seismic improvements as part of the adaptive reuse project on the Vivian Apartment Building in Portland, OR. The project converted the historic apartment/ retail building into an upscale hostel and gastropub while reducing energy costs and meeting seismic requirements.

Project Overview

Green Light Development was looking to repurpose the Vivian Apartment Building—a vacant three-story apartment and retail building located in Northeast Portland—into new office space when the team was introduced to the concept of a social hostel through a business partner. After due diligence, the firm decided to move forward with redeveloping the property into a three-story hostel under the KEX brand that would feature a mixture of four, six, and 10 bunk rooms with a gastropub on the ground level, a rooftop deck bar, and additional space for private events.

“Many lenders were hesitant to provide capital for the hostel project. PropertyFit CPACE financing provided by PACE Loan Group enabled us to move the project forward and was a cheaper alternative to other debt financing options.”

Jake Raiton, Development Director, Green Light Development

Due to the unconventional building use, Green Light found it difficult to secure a debt lender to supply capital for the hostel project. In addition to property acquisition and redevelopment costs, the building also required seismic retrofits to comply with local codes. Then the team discovered that PropertyFit could provide a solution to both issues, providing low-cost financing for the seismic retrofits along with an overhaul of the building’s energy and water components to implement high-efficiency technologies. The $3.5M commercial PACE loan provided by PACE Loan Group slotted well into the capital stack by replacing expensive and difficult-to-acquire debt with 20-year, fully amortized financing, reducing the blended cost of capital for the project. The remainder of the $12.3M capital stack comprised a $7M equity investment from Green Light and a $1.5M construction loan.

The energy efficiency improvements installed through PropertyFit financing include high efficiency lighting, HVAC, windows, plumbing, and other features that significantly reduce the building’s energy demand and costs. Seismic improvements include concrete shear walls, brace frames on the ground floor, and additional structural reinforcements that increase earthquake resistance and minimize the impact to the building if an earthquake were to occur.