BROOKLYN PARK, MN-The 231-suite Northland Inn hotel,foreclosed on last year, has been sold to a joint venture ofProvidence, RI-based Hotel Asset Value Enhancement and a fundmanaged by Fidelity Real Estate Group. Jones Lang LaSalle Hotelshandled the sale for Helios AMC, a special servicer.

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The 20-year-old hotel had trouble meeting its loan agreement,says Adam McGaughy, an EVP with JLL, and has been less than 60%full in recent months. However, the property is the only all-suiteconference center hotel in the Minneapolis market, with aneight-story atrium, and has 33,000 square feet of dedicatedconference space.

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The price was undisclosed, and McGaughy says a report of a $2.5million appraisal was incorrect, though he confirmed the propertyhad a delinquent $20.5 million mortgage. Column Financial was themortgage holder, and Parkland Hotel Investors was the developer andprior owner that walked away from the property.

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McGaughy tells GlobeSt.com that the buyers are looking to spendlikely about $35,000 per key on renovations. “They’re researchingtheir alternatives, potentially rebranding as a Marriott orHilton,” he says. StepStone Hospitality, a subsidiary of HotelAsset Value, will manage the property.

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McGaughy’s company recently handled another prominent sale inthe market, the $33 million disposition of the Grand Hotel. The twodeals are trading because of the bifurcation, one a prominent, coreasset chased by REITs and the other a distressed hotel sought byinvestors chasing low-key-price deals, he says.

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“We’re at a strange point in the market, it’s a seller’s marketto a degree. There’s lots of capital looking to make a play forhotel space, and not a lot of product,” McGaughy says. Minneapolisis also coming off an unusual time, following the 2008 RepublicanNational Convention when hotels sprang up and then occupancieslagged due to the oversupply. “Now demand has picked up quite abit, with occupancy gaining traction, and that should help push thedaily rate. Also, the city is rebounding better than mostMidwestern cities,” he says.

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