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AIG Snags New Hotel at U of M for $38.3M

Purchase Price is $272,000 Per Room
March 5, 2018
AIG Global Real Estate Investment Corp. has bought a brand new, 141-room DoubleTree by Hilton hotel on the east side of the University of Minnesota campus.

The company paid $38.3 million for the five-story hospitality property at 511 Huron Blvd. SE, which was completed in 2017. The deal closed on Feb. 9, but the certificate of real estate value was not public until Monday.

The seller was a collection of six LLCs, each of which had partial ownership of the hotel. Four were registered to James Eischens, who owns and manages a portfolio that includes hotels, offices, charter schools, apartments and single family homes that he rents out. He also owns a resort property near the Canadian border, Elbow Lake Lodge, which is located in the Kabetogama State Forest.

Entities controlled by Eischens appeared to have an 85 percent stake in the DoubleTree prior to its sale to AIG. The remaining 15 percent was split evenly between two LLCs, Huron Investment I and NB Property1. The former shares an address with Reuter Walton Cos.’ construction and development office, while the latter goes to an address that is also home to the real estate and development company North Bay Cos. Both are in Minneapolis.

Reuter Walton Development is spearheaded by Nick Walton. North Bay was founded last year by Dan Oberpriller. Until last fall, the two were partners in the Minneapolis development company CPM Cos.

The purchase price works out to about $272,000 per room, and is more than three times the assessed value for 2018, which stood at about $10.6 million according to Hennepin County property records.

CPM and Eischens purchased the site in May 2015 for about $4.3 million. At the time, it was partially occupied by a 105-year-old industrial building which had been home to a chow mein factory, according to the city of Minneapolis.

The 120,000-square-foot hotel opened in spring of 2017, according to a news release from Hilton Worldwide. Amenities include an in-house restaurant and bar, event center with space to seat up to 250, a gym, a heated indoor pool and a 24-hour business center.

The site is one block east of the University of Minnesota Health Clinics and Surgery Center, two blocks south of a Green Line light rail station and three blocks south of the Minnesota Gophers’ TCF Bank Stadium. It is also immediately north of one of the two Solhaus student apartment buildings, which sold to San Francisco-based FPA Multifamily in December 2017 for $27.4 million.

The CoStar Group could not reach executives on either the buying or selling side for comment on Monday.

Brokers from the Chicago office of Los Angeles-based CBRE represented the sellers during the deal, according to a news release from the brokerage. The team included Nate Sahn, Pravin Boteju and James Foxx.

Please see CoStar COMPS #4144609 for additional information on this transaction.



Clare Kennedy, Minneapolis / St. Paul Market Reporter  CoStar Group   
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