Non-Traded REIT Pays $3.95M for $6.5M Mezz Loan on W Minneapolis

who3019ex.66883_lgARC Realty Finance Trust, Inc. has acquired a $6.5 million mezzanine loan secured by the pledge of ownership interests in the owner and subtenant of the W Minneapolis – The Foshay hotel in Minneapolis, MN, a 32-story, 229-room property with 6,761 square feet of meeting and event space.

ARC Realty Finance Trust purchased the mezzanine loan at a discounted price of $3.95 million.

The mezzanine loan was originated in connection with a $51 million senior loan secured by the fee simple interest in the property. The mezzanine loan and senior loan total a 77 percent loan-to-appraised value ratio and were made to allow the owner of the property to refinance certain other borrowings.

The mezzanine loan bears interest at a fixed rate of 5.462% per annum, subject to an interest rate increase in the case of a default. The mezzanine loan has an initial term of 10 years and requires amortizing monthly payments of principal and interest.

The underwritten cash flow available for debt service is $5.1 million, which exceeds the aggregate forward debt service payments related to the property by 1.31x.

The W Minneapolis was modeled after the Washington Monument when built in 1929 and was added to the National Registry of Historic Places in 1978 as an example of Art Deco architecture. The Foshay was originally configured as office space until 2006 when current ownership acquired, extensively renovated and repositioned the property as the W Minneapolis.

Opened in 2008, the W Minneapolis is a four-star hotel and the top performing luxury hotel in the downtown Minneapolis market. The W Minneapolis features the nationally recognized Manny’s Steakhouse. The top floor of the property offers the only observation deck in Minneapolis providing 360-degree views of the city.