Fort Shelby Residences and DoubleTree by Hilton

Fort Shelby Holding Co./MCP Development, LLC completed the redevelopment of the historic Fort Shelby Hotel in downtown Detroit, Michigan under the management of GIP’s Founder and CEO, Richard Curto. The intent of the Fort Shelby redevelopment was to highlight the character and grandeur of the original hotel (recognized as a national historic landmark), but with the flair of 21st century style and activity.

The hotel was originally constructed in two phases. The initial 10-story structure was built in 1916, and the 22-story addition, designed by the well-known and innovative architect Albert Kahn, was built in 1927. The building stood vacant for thirty-two years. The once-prominent hotel in downtown Detroit had become an abandoned relic.

The development’s capital structure was composed of three primary sources: mortgage instruments, ownership equity and tax credits. The first mortgage loan of $33M was provided by the General Retirement System of the City of Detroit, which was 35% of the total cost. HUD provided a “soft second” fixed mortgage at 4.5% for 20 years under the HUD Section 108 program (economic redevelopment) that is guaranteed by the City. The remaining capital of $43M was equity from ownership, Hilton Hotels Corporation, and tax credit equity from Chevron Oil Company, General Electric, and Progressive Life Insurance. Clearly, the large tax incentives played an integral role in the capital structure and allowed the project to eschew other more expensive and risk laden financial instruments.

The DoubleTree Guest Suites, the suite concept by Hilton Hotel, is operated by Hilton Hotels Corporation on behalf of ownership.