Dealmaker: Mesa West Capital Provides $68M for Hotel, Office

Mesa West Capital, Los Angeles, provided $68 million in first mortgage debt for a Chicago hotel and Minneapolis office building.

In Chicago, Mesa West lent a Sterling Bay-led partnership $48 million in short-term debt to refinance the 178-room Talbott Hotel. The financing included $7 million in mezzanine debt placed at closing.

Sterling Bay acquired the 16-story asset in fall 2015 and launched a capital investment program to rebrand the property as a luxury boutique hotel in Chicago’s Gold Coast submarket. Improvements included a complete renovation of the lobby, common areas and guest rooms, a reconfigured first floor and 29 new guest rooms. The hotel reopened last May.

Mesa West’s floating-rate non-recourse loan will give Sterling Bay time to stabilize the hotel during the five-year loan term, said Mesa West Vice President Matthew Snyder, who originated the loan with Associate Brian Hirsh.

“The opportunity allowed Mesa West to lend on a high-quality, newly renovated product in the desirable Gold Coast submarket,” Snyder said.

Mesa West also originated its first loan in Minnesota by funding a $20 million loan to recapitalize a historic 150,000-square-foot office building in Minneapolis.

The five-year interest-only loan was secured by The Colwell Building, a recently renovated eight-story redstone and brick building in Minneapolis’ Warehouse District. A joint venture led by Spear Street Capital, San Francisco, recently completed the first phase of a multi-million dollar renovation.

Some loan proceeds will build a fitness center and bike storage room as well as fund leasing and tenant improvement costs associated with stabilizing the building.

“The Colwell Building is one of the few institutionally owned and managed buildings in the Warehouse District,” Snyder said.