AJ Capital Lands $65M Refinance for Campus Hotel in Minneapolis


AJ Capital Partners has nabbed a $65 million Aareal Capital refinancing for its Graduate-brand hotel in Minneapolis, Commercial Observer can first report.

The floating-rate debt knocks out the prior Credit Suisse (CS) financing on the property, located at 615 Washington Avenue Southeast in the campus of the University of Minnesota, Twin Cities. The 304-room hotel is the closest lodging to the center of the 48,000-student campus, which spans both banks of the Mississippi River about a mile from downtown Minneapolis.

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The three-year debt comes with two one-year extension options.

Jordan Roeschlaub, Dustin Stolly and Mark Schoenholtz led the Newmark (NMRK) Knight Frank group that sourced the loan for AJ Capital, the Chicago-based company behind the Graduate brand. NKF’s Nick Scribani, Chris Kramer and Drew Ahlers also worked on the deal.

“The property’s location directly on campus makes it the preeminent choice for university-driven guests,” Roeschlaub said. “Furthermore, given its proximity to downtown Minneapolis, the [hotel] is also a top choice for anyone visiting in the metro area.”

AJ Capital bought the building, which used to be home to The Commons Hotel, in 2016, and reopened it a year later following a redesign. Documents from the University of Minnesota’s regents board show that AJ Capital owns the property under a ground lease from the institution, which expires in 2061 and offers a ten-year renewal option. The ground lease, which includes 122 parking spaces, transferred to AJ Capital when it bought the building four years ago.

At the hotel, a restaurant and bar called The Beacon serves guests and visitors. There’s also corporate meeting space, a fitness center and a suite of virtual golf simulators.

The Graduate brand’s rapid expansion has fueled a slew of recent refinancings, both individually and for portfolios of properties. Blackstone (BX) refinanced a group of nine graduate properties with a $275 million loan three years ago; more recently, construction and transitional loans have financed Graduate properties in New York City, and Nashville, Tenn.

“AJ Capital, through its Graduate brand, has found a true niche in the hospitality space by targeting university-centric assets and curating them to the local market,” said Schoenholtz, who co-heads NKF’s lodging division.

Executives at AJ Capital and Aareal didn’t immediately respond to inquiries.