Hempel buying another well-known downtown Minneapolis building

A joint venture of three investors plans to buy the Loews Minneapolis Hotel in downtown, one of which is Eden Prairie-based Hempel Real Estate, which has recently bought several prominent buildings in the area.

Milwaukee-based Marcus Hotels & Resorts and Oklahoma City-based Robinson Park Investments are the other investors. The sale should close in early March, though no parties have disclosed terms of the deal.

The hotel, across North First Avenue from Target Center between North Sixth and Seventh streets, is Hempel’s third major purchase in the past year. This past summer, it bought the LaSalle Plaza office building for $46 million, a steep discount. And in the fall, it bought the older, smaller Pence Building, which connects to LaSalle Plaza by skyway. Both buildings are about two blocks away from Loews.

“The agreement to purchase the Loews Minneapolis Hotel is consistent with our strategy to co-invest with like-minded partners and manage leading properties across the nation,” said Michael Evans, president of Marcus Hotels & Resorts, in a statement.

A Hempel representative could not be reached for comment.

Hempel has built a diversified property portfolio with office, retail and medical office space, apartments and land for future development. Its holdings are largely in the Twin Cities, but Hempel also owns several properties in Milwaukee. Its only other hotel is a Best Western Plus near the Mall of America.

The hotel market is challenging. New York-based Loews Hotels & Resorts paid $65 million in 2014 to acquire the then-named Graves 601 Hotel from the local Graves Hospitality Corp., and property records suggest that the new sale price will be significantly less. Hennepin County currently has the property assessed at $24.2 million.

“Hotels depending on corporate business are still trying to recover,” said Ted Leines, CEO of Eden Prairie-based Leines Hotel Advisors, a hotel brokerage firm. “Corporate clients are generally their top-paying clients.”

Leines said business remaining soft is hurting hotel valuations.

The Loews hotel was part of a redevelopment of the long-troubled Block E, which sat vacant throughout the 1990s as a surface parking lot. A retail-entertainment concept, owned separately from the hotel, dominated the project but struggled to draw customers. It is now known as Mayo Clinic Square.