business

The transformation of the former Whitney Hotel to a 25-unit condominium is drawing to a close, and by all accounts, it's been a marathon.

Real estate investor and developer Ned Abdul bought the property in a foreclosure auction for $4.65 million about three years ago. Today about half the units have been sold and are occupied. Some unsold units are being finished, and others won't be completed until they're sold.

How soon that happens is anybody's guess. Michael Roess, a real estate broker and partner in the project, acknowledges that the redevelopment took longer than expected and was begun at the peak of what is now a weaker condo market.

"We underestimated the length of the city process," said Roess of the approvals required for some changes to the property in the St. Anthony Falls Historic District.

This isn't the first time the Whitney has been plagued by bad timing. When it opened as a hotel in 1987, it sat amid vacant warehouses and mills. It attracted celebrity guests like the Rolling Stones and Janet Jackson but struggled to generate enough ongoing business and closed in 2003.

Abdul acquired the property after another group of investors that had purchased it and planned to convert it to luxury condominiums faltered. For a while, he considered renovating it and keeping it as a hotel.

"It's probably one of the worst business decisions I've ever made," Abdul says of the choice to convert it instead to condos. "It won't be one of my most lucrative projects."

Steve Roland, another Whitney partner, is more blunt: "In today's economy I would not see ourselves making a profit."

$30 million conversion to condos

The post 9/11 boom in travel and the riverfront's revival as a cultural and entertainment hot spot, including the opening last year of the new Guthrie Theater, could have made the Whitney an ideal place for a hotel. Keeping it a hotel also would have greatly lowered the project's $30 million cost, Abdul said.

To pull off the conversion to condos, the developers had to add balconies and larger windows in the original part of the building, constructed in 1879 as the Standard Mill. City planners had to review those alterations and changes to a riverfront plaza to accommodate underground parking. Another proposed change -- a three-story addition to put nine units on top of a newer section of the hotel -- had to be approved, although it later was dropped by the developers because of the slowdown in condo sales, Roess said.

For Abdul, the Whitney could be a departure from a string of successes in repositioning older, sometimes distressed buildings.

In Minneapolis, Abdul's holdings include the Lumber Exchange Building on Hennepin Avenue, which was only half-full when he and sometime partner Ken Sherman bought it out of receivership in 2004. As of June 30 the building was nearly 90 percent occupied, according to United Properties.

Abdul and Sherman also have redeveloped several Warehouse District properties, including the Wyman building, where advertising firm Colle + McVoy relocated from Bloomington.

Abdul, on his own or with partners, also has acquired and redeveloped properties in Uptown, St. Paul's Lowertown neighborhood, and area suburbs. Abdul won't disclose the size of his holdings but says he also has properties outside Minnesota.

Abdul and his company, Swervo Development, also have been associated with some of Minneapolis' most notorious recent developments. They include 607 Washington Av. S., where several units have been foreclosed, and the Sexton, where development partners have sued each other and also face foreclosure on project loans. However, in both cases the problems arose after Abdul sold the properties.

Sherman said Abdul is controversial because he doesn't fit the button-down developer stereotype.

"He's part Egyptian and part Puerto Rican. He has a shaved head, dresses like a hip-hop guy and drives expensive cars," Sherman said. "He might not stick out if he was in Miami, but he does in Minneapolis."