The Keefer House Hotel passed an important hurdle when it received a $2 million equity investment by the Michigan Economic Development Corporation at the end of January.
With the last leg of funding approved, CL Real Estate has secured a $12 million capital investment for the project in the 130-year-old Keefer House, a building that has been vacant since 2005 in historic downtown Hillsdale.
“It’s really the last major hurdle that was in front of us. There’s still more to do, but not much more,” Michigan Development Associate Brant Cohen of CL Real Estate said. “And we’re really excited to have crossed this point where we’ve identified our capital stack in its entirety.”
MEDC’s investment represents 16% of the project’s total financing, but it was the linchpin of its progress that was halted while Michigan paused review of all economic development projects due to COVID-19, according to Cohen.
“You really can’t start construction until you’ve received the official response by the state whether they’ll provide you with funding,” Cohen said.
CL Real Estate, the firm overseeing the project, plans to renovate the hotel with a restaurant and three retail spaces. Once built, the hotel and shops will be operated by Hotel Investment Services, a management company that operates hotels across the state of Michigan.
“Everything’s tied together. Our principal investors have put their equity into the project,” Cohen said. “We’re really excited we’ve got all the financial sources put together, and now it’s just finishing up the details.”
Those details are mostly paperwork and planning the execution of the project, Cohen said, which is crucial to get right the first time.
“It’s the most important part because you want to make sure everything is correct before you put a shovel in the ground so you don’t have to stop,” Cohen said.
CL President Nathan Watson said he is looking forward to that point.
“We expect that the opening of the Keefer will be a great day we can all enjoy in the not-too-distant future,” Watson said in a press release.
The project is expected to be a catalyst for an urban renewal in downtown Hillsdale. The MEDC equity investment is an expression of confidence in the city’s resilience because equity ties the entity to the future of the project.
“The Keefer House is a contributing building to the city of Hillsdale’s National Register of Historic Places commercial district, but has been vacant creating a detrimental influence on the downtown landscape,” MEDC said in a press release. “The development is expected to transform downtown Hillsdale and spur economic development throughout the city.”
Cohen said he feels proud of the progress his team has made since taking on the project two years ago.
“This is the furthest anyone has ever gotten in terms of revitalizing the Keefer and making it as profitable as it will be for the community,” Cohen said. “We’re really excited to think that every day we take another step closer to getting this thing under construction and getting it open. It’s been a Herculean effort and we’re really excited about it.”
