Oregon developer is going with the green
Portland-based Gerding Elden, a member of Business Leaders for Climate Solutions, is convinced sustainable building has finally arrived as a viable business strategy, thanks in part to the Obama administration's view of the green economy as one of the country's primary economic engines.
Mark Edlen, Managing Principal, Gerding Edlen
....With real estate development all but dead, Gerding Edlen opted to change course. It's trying to do that with a new business model, a new partner and an ambitious new funding plan.
Developing new buildings for a fee and a slice of the profits is out. The green economy is in.
Gerding Edlen's strategy is to buy completed or partly finished buildings at bargain prices, retrofit them with state-of-the-art energy-efficient technology and then either sell the buildings or hold them and lease them out.
Edlen is convinced sustainable building has finally arrived as a viable business strategy, thanks in part to the Obama administration's view of the green economy as one of the country's primary economic engines.
"You've got to get your hands dirty and do deep retrofits," Edlen said. "It's about insulation, new windows or reglazing existing windows, it's about new water-use strategies."
He declined to identify any current projects the company is working on, though he did say it has bids outstanding on 10 projects in three West Coast markets.
The firm has brought on a partner to help build the new business. In 2008, as Gerding Edlen first hit the shoals of the economic crash, Edlen agreed to sell a minority share of the company to Equilibrium Capital of Portland.
The deal was an enormous coup for Equilibrium, a startup venture capital fund put together by investor David Chen and Bill Campbell, a former partner at the Ater Wynne law firm. The Gerding Edlen investment gave Equilibrium a piece of one of the most renowned companies in the city right in its green-economy sweet spot.
"It's a very exciting opportunity," said Chen, who joined the Gerding Edlen board.
The move was out of character for Edlen. His firm routinely raised money from well-heeled investors for individual projects. But it had zealously restricted ownership stakes in the company to a tiny coterie of company executives.
Neither Edlen nor Chen would provide details of the Equilibrium relationship, declining to divulge how much money the fund invested or what percentage it owns.
"After six months of talk, it became apparent he could take us in some new directions," Edlen said of Chen.
Finding financing for real estate projects remains difficult. But if the company successfully raises $500 million for its Green Cities fund, Gerding Edlen will have attained significant financial momentum with or without outside lenders.
When it registered the fund on Dec. 28, Gerding Edlen said it had raised $40 million from three investors, according to the SEC filing.
Edlen wouldn't talk about the fund, citing SEC rules.
Raising $500 million from investors is an ambitious endeavor for a company that digested big losses.
But investors who lost in Edlen's recent condo projects still give him high marks for candor and tenacity.
"Let's face it, they got caught in some tough times," said Eli Morgan, a Portland investor who helped bankroll condo towers in Los Angeles and Bellevue. "So did a lot of other developers. They're smart operators."....
Read the whole story in The Oregonian
