Finance & Commerce
By Dan Netter
December 13, 2023
A loan extension of up to three years has been granted for the IDS Center, a staple of the Minneapolis skyline, following a months-long negotiation process.
Accesso, the owner of the tower, announced the extension in a press release Tuesday, calling it a “testament” to the group’s care and management of the 57-floor tower.
In the release, Deb Kolar, the general manager of the tower, said she was excited considering the “macroeconomic” environment was difficult.
“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 the at property despite a difficult macroeconomic environment,” Kolar said. “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.”
The IDS Center, at 80 S. Eighth Street in downtown Minneapolis, was acquired by Accesso in April 2013 for $253 million. According to Hennepin County tax information, the property was valued at $270 million in 2022 before falling to be valued at $257 million in 2023.
Accesso said landing the loan extension comes after a deadline to pay off a mortgage balance passed in May.
Colliers Senior Vice President John McCarthy said the loan extension is positive news for the Minneapolis office market and is evidence of the confidence that Accesso and its lender have in the IDS Center.
McCarthy said that the effects of the loan will possibly be seen for tenants who lease at IDS Center as it allows Accesso to refocus on tenant experience.
“This is wonderful news, and it will have some great ripple effects because it’s the high watermark building in Minneapolis,” McCarthy said.
Had the loan not been secured, McCarthy said a couple of things could have happened: A special servicer could have started operating the building for the bondholders, or the lender and Accesso could have “limped along a little bit” and pretended the loan didn’t expire while agreeing to deal with it later.
Matt Mullins, vice president at Maxfield Research, said Accesso being overdue on its loan is a “bad look” for the Twin Cities but said that it is not as bad as it seems once the entire office market is taken into consideration. He said Minneapolis is leading the U.S. in debt delinquency.
“You’re going to see a lot more extensions, I think, in the office sector,” Mullins said. This is because some of the leases were signed prior to the pandemic. Those leases will start to hit the 10-year mark and property owners will start to lose tenants.