MILWAUKEE—NGKF Capital Markets has just secured a $19.5 million first-mortgage loan with Starwood Mortgage Capital to refinance the 100-room, boutique Iron Horse Hotel at 500 W. Florida St. in Milwaukee. NGKF officials say they discovered a great deal of lender interest in the property, a reflection of both the hotel market in general, and the reputation of the Iron Horse, a popular attraction since it opened on the eve of the recession.
“Hotel performance has been very strong over the past 24 months,” NGKF senior managing director Ben Greazel, who arranged the financing, tells GlobeSt.com. And the Iron Horse is “the top performing hotel in the market.”
The deal is also an important one for Milwaukee, since it helps put a vibrant business in an old industrial neighborhood on a sounder financial footing. Developer Tim Dixon renovated the century-old warehouse building, located in the Walker's Point area near the Harley-Davidson Museum, back in 2008, using both historic tax credits and New Market Tax Credits to help finance the project. “It's spectacular,” says Greazel. “The attention to detail is like nothing I've ever seen.”
But Dixon had the bad luck to open it on the day Lehman Bros. failed. The fallout from that day caused one of the Iron Horse's investors to pull out, unsettling its finances even as the hotel, along with its restaurants and bars like Smyth and The Yard, became a destination for motorcycle enthusiasts, business travelers and local visitors.
The new mortgage is fixed at 4.4% for 10 years with a 30-year amortization schedule. The owner, Dixon's Rider Hotel LLC, “picked up significant savings,” says Greazel. “Their overall cost of capital is greatly reduced.”
“The capital markets are very favorable for hotel investors,” he adds. “Current rates for well-positioned, stabilized assets range from 4% to 4.5% for 10-year, fixed-rate money.”
“Out of all the lenders we spoke to, about 95% showed interest,” he adds.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
