Downtown Minneapolis' stalled West Hotel project is back on track after resolving financing issues.
After Edina-based Onward Investors stepped in to assist developer Minneapolis-based Commutator LLC by buying the existing loan, construction should resume in the spring to finish the remaining 12 months of work ahead of a 2025 opening.
"I feel, frankly, even more bullish on the prospects for the project," said David Wilson, a partner with Commutator LLC. "I want to get this open."
Construction on the North Loop facility was halted this past summer when the original lender, Broadmark Realty Capital Inc., sued Commutator for defaulting on the $48.6 million construction loan issued in 2021. In the August suit, Broadmark alleged Commutator owed $18 million.
That left the 123-room boutique hotel only partly finished near the corner of N. 1st Street and 2nd Avenue N. ahead of a planned fall 2023 opening.
Onward finished its deal with Commutator on Dec. 15. Broadmark voluntarily withdrew its suit Jan. 2.
"We were initially introduced to the borrowers through a local bank contact and were drawn to the project given its excellent location in one of the most desirable submarkets in Minneapolis," said Jon Lanners, partner with Onward Investors.
Lanners said he could not comment on the terms of Onward's acquisition of the loan. Onward is also not providing any construction financing. Wilson said the developers are working on a new senior construction loan but declined to disclose the project's latest budget.
Meet Minneapolis CEO Melvin Tennant said in a statement he has been aware of West Hotel's challenges but is pleased that construction will soon resume.
"The success of hotels near that area, such as the Hewing and the Four Seasons, has shown that there is demand for a property like the West Hotel," Tennant said in a statement.
Planning for development at the site surrounding 121 N. First St. began around 2017 with anticipated completion dates as early as 2019. Plans included apartments, retail and offices at different points before settling on a hotel.
The West Hotel project aims to rehabilitate two vintage buildings while also providing some new construction. The original Commutator Building at 125 N. First St., for example, dates to 1884. The name of the hotel itself refers to Minneapolis' first luxury hotel that existed from 1884 until its demolition in 1940.
A third vintage building adjacent to the hotel will house an event center. The West Hotel developers own that project under a separate entity and plan to open it after the hotel.
Massachusetts-based Salt Hotels will operate the West Hotel with award-winning Minneapolis chef Tim McKee overseeing the culinary operations.
"We have all of the same business partners that we started with," Wilson said. "We're glad to be moving forward."
