Twin Cities Business
December 14, 2023
By Winter Keefer
As downtowns across the nation face a tumultuous office climate, the owner of Minnesota’s tallest skyscraper finds some temporary relief.
The owner of the IDS Center, Minnesota’s tallest tower, this week announced it has secured a three-year loan extension despite tumultuous conditions for the nation’s office climate.
The agreement comes several months after ownership missed a balloon payment on the $151.7 million loan, according to the Star Tribune. The extension gives Accesso more time to find permanent financing.
The extension was negotiated by Florida-based building owner Accesso, with assistance from Iron Hound Management Company LLC, a commercial real estate finance firm specializing in loan restructurings and debt and equity placements. Accesso intends to continue to seek longer-term financing as market conditions in Minneapolis and across the U.S. improve, the company said in a news release issued Tuesday.
“We are excited to come to terms on a loan extension for the IDS Center as challenges surrounding the availability of capital persist, reflecting our success at the property despite a difficult macroeconomic environment,” said Deb Kolar, general manager at Accesso. “This extension enables us to continue doing what we’ve done successfully for many years – adeptly managing the iconic property while executing a highly successful leasing program. We look forward to sharing news on leasing activity in the near future.”
Christopher Herron, Kevin Thompson, and Anthony D’Amelio of Iron Hound Management negotiated the loan modification on behalf of ownership.
Year-to-date, the IDS Center has completed 16 lease transactions for more than 121,670 square feet.
The 1.42 million-square-foot, 57-story Class A office tower celebrated its 50th anniversary in 2022. In 2021, Accesso completed a $5 million renovation of the Crystal Court atrium at the base of the tower.
It’s a tough climate for any commercial real estate owner right now. Building owners with mortgages who are renting to tenants are in a tough spot. For many, debt has accrued from capital projects started before the pandemic.
In 2022, national law firm Ballard Spahr launched a “distressed office” team to address the possibility of mortgage defaults. It found that U.S. office owners will owe about $900 billion by the end of 2024. By 2026, debt could rise to over $1.5 trillion.