The historic Plymouth Building in downtown Minneapolis will be converted into a 290-room Embassy Suites by Hilton hotel, in part through a $65 million investment by U.S. Bank, the Minneapolis-based lender announced Tuesday.
U.S. Bank reportedly provided $65 million in construction and acquisition loans partially replaced by $16.2 million in equity raised by federal historic tax credits to renovate the 12-story, 384,000-square-foot office building, at 12 S. Sixth St. and Hennepin Avenue.
The project’s total acquisition and renovation cost is $109.6 million.
“With the Plymouth Building’s close proximity to the Target Center and the Mayo Clinic Sports Medicine Center, this development will increase hotel options downtown and drive economic activity for Minneapolis,” Vice President Bob Von Hoene of the bank’s community lending division, based in St. Louis, said in a prepared statement.
“This project is a tremendous undertaking, given the size and scope of the renovation. But it’s important to preserve Minneapolis’ history and flair by returning the Plymouth Building to active use,” Michael Coolidge, CIO of HRI Properties of Minneapolis, said in the statement. “We are excited to work with U.S. Bank once again to put historic tax credits and community lending to use improving the downtown economy.”
HRI Properties declined Commercial Property Executive’s request for further information about the project.
The City of Minneapolis is providing $1.5 million in environmental and transit-oriented district grants for the development.
Ryan Cos. of Minneapolis is the general contractor. The hotel conversion is expected to be complete by September 2016.
Completed in 1910–11, the Plymouth Building is listed on the National Register of Historic Places.
The Minneapolis Star Tribune reported in July 2014 on plans at that time to convert the property, which is in the city’s entertainment district, into a luxury Conrad Hotel.
Over the last 20 years, U.S. Bank reportedly has invested nearly $70 million in historic tax credit equity in 16 Minneapolis buildings, including the Plymouth Building.
The Minneapolis hospitality sector is in solid if unspectacular shape, with room demand there (from both business and leisure travel) down in February and March, but expected to rise in the second quarter, according to a midyear report from Marcus & Millichap.
Occupancy was slightly higher in the first quarter than 12 months prior, and there was a 5.7 percent gain in RevPAR over the same period. Investor interest in hospitality properties grew, and transaction velocity outpaced the relatively modest gains in operating measures.