Fort Shelby DoubleTree by Hilton
Richard Curto is the Manager of Fort Shelby Holding Co./.MCP Development, LLC which completed the redevelopment of the historic Fort Shelby Hotel in downtown Detroit, Michigan into a 204-room Hilton Doubletree Guest Suites Hotel. The project, which opened in mid-December of 2008, includes the hotel, 24,000 square foot International Association of Conference Centers (IACC) conference center, 56 luxury residences with hotel amenities and services and a Finn and Porter Steakhouse/Seafood restaurant.
The project consisted of the renovation of the Fort Shelby Hotel, recognized as a national historic landmark. The hotel was originally constructed in two phases. The initial 10-story structure was built in 1916 and the 22-story addition, designed by the well-known and innovative architect Albert Kahn, was built in 1927. For the past thirty-two years the building has been vacant. Although recognized as a national historic landmark, the once prominent hotel in downtown Detroit became an abandoned relic. The redevelopment focused on the character and grandeur of the original Fort Shelby Hotel, but with the flair of 21st century style and activity. The Doubletree Guest Suites, the suite concept by Hilton Hotel, is operated by Hilton Hotels Corporation on behalf of ownership.
The capital structure is composed of three primary sources: mortgage instruments, ownership equity and tax credits. The first mortgage loan of $33 million was provided by the General Retirement System of the City of Detroit which is 35% of the total cost. HUD provided a “soft second” fixed at 4.5% for 20 years under the HUD Section 108 program (economic redevelopment) that is guaranteed by the City. The remaining capital of $43 million is equity from ownership, Hilton Hotels Corporation and tax credit equity from Chevron Oil Company, General Electric, and Progressive Life Insurance. Clearly, the large tax incentives played an integral role in the capital structure and allow the project to eschew other more expensive and risk laden financial instruments
Cleveland Clinic, Holiday Inn
Gateway Investment Partners was selected by the Cleveland Clinic to develop a new hotel as a part of a ground lease transaction with the Clinic. The Cleveland Clinic currently owns the InterContinental & InterContinental Suites, both of which are operated by InterContinental Hotels Group (“IHG”), and previously also owned a third hotel, known as the “Guest House”, which was shut down in August 2013. The Clinic had a desire to have hotels at all price points for their patients and guests, and as such, they wanted to replace the closed down Guest House with the Holiday Inn hotel to be the low-cost option for the guests.
Since shutting down the “Guest House” the Clinic had to turn away 5,000 rooms a month to other hotels in the area. The Holiday Inn will help fill that gap. As a result, The Cleveland Clinic, which generated $6.5 billion in revenue in 2013, provided a room occupancy and rate guarantee, reducing substantial risk from the investment profile of the deal.
The hotel is currently under construction with an anticipated opening in Q2 of 2016. The 174,000 SF hotel will be the most upscale and modern Holiday Inn in the country. It will include a two-story lobby that extends into a 125 seat bar/restaurant, an indoor pool, exercise/fitness room, 1,300 SF of meeting space and a large outdoor patio area with multiple fire pits.