Westin Minneapolis sold to N.Y. investment firm for $66M

Carey Watermark Investors Inc. bought the 214-room Westin Minneapolis hotel for $66.4 million, marking one of the highest sale prices per room in the city's history.

This is the first hotel property in Minnesota for the New York-based real estate investment trust. The sale, at $310,280 per room, is more than the July purchase of the 251-room Graves 601 Hotel, now called Loews Minneapolis Hotel, for $65 million, or nearly $259,000 per room.

An affiliate of HEI Hotels & Resorts sold the Westin hotel Thursday but will continue managing the property. The Chicago-based HEI affiliate purchased the site in 2007 for $40.5 million, according to Hennepin County property records.

"CWI's investment in the Westin Minneapolis represented the opportunity to acquire an irreplaceable landmark and leading full-service hotel in a strong market," Michael Medzigian, chief executive of CWI, said in a statement.

Secondary markets like Minneapolis have continued to attract institutional buyers. Properties in the Midwest boasted the highest cap rates — an indicator on how good of a return an investment may earn — in 2014, according to the Trepp Market Snapshot Report.

And the Minneapolis-St. Paul hotel market, according to CWI, has experienced a five-year growth spurt of 7.7 percent in revenue per available room, a metric used to gauge a property's performance.

Carey Watermark, founded in 2008, is affiliated with W.P. Carey, a global net-lease REIT that has approximately $9.8 billion in real estate assets and manages about $8.3 billion.

In its explanation of the deal, CWI cited the Westin's proximity to major sporting facilities and large businesses. The hotel faces the front entrance of the Wells Fargo Center. The building has many historical elements, and the Bank Restaurant, ­visible from the balcony skyway, is among the building's ­greatest draws.

Built in 1942 as the Farmers & Mechanics Bank, the building was transformed into a hotel in 2007. Its architectural features, such as the marble staircase, wood carvings and vaulted lobby ceilings, pronounce the wealth and industry that defined midcentury Minnesota.

"Downtown Minneapolis is probably the strongest submarket in Minnesota for hospitality. And this particular asset is leading that," said Ronn Thomas, director of brokerage services with a hospitality focus for Cushman in Minneapolis.

CWI's purchase was financed with $43.5 million in debt. The total investment is $69.6 million, which includes $3.2 million in planned ­capital improvements and acquisition-related costs.

Future demand is expected to help the hotel industry, with Minneapolis hosting the Super Bowl in 2018 and the NCAA Final Four in 2019.

Kristen Leigh Painter • 612-673-4767