CASE STUDY:

Canadian Pacific Plaza

Minneapolis, Minnesota

Hempel expertly relocated the sole tenant of the Soo Line Building, Canadian Pacific Rail, to a new headquarters.

393,000

SQUARE FEET

99%

OCCUPANCY

$7.1M

DEVELOPMENT BUDGET

In early 2011, Hempel purchased the Soo Line Building, located in the heart of downtown Minneapolis. The 226,000 square foot building’s sole tenant was Canadian Pacific Rail, which occupied 35% of the building at the time of the acquisition. Later that same year, Hempel purchased the neighboring office building, One Financial Plaza, and relocated Canadian Pacific Rail from Soo Line Building to One Financial Plaza. Hempel then sold Soo Line Building to an apartment redeveloper.

As a part of Canadian Pacific Rail’s relocation from Soo Line Building to One Financial Plaza, One Financial Plaza was renamed to Canadian Pacific Plaza. The 393,000-square foot office building was purchased for $23.6 million with a New York-based hedge fund acting as a joint venture partner. At the time, the building was only 48% occupied. The value-add strategy was to update the building’s common elements necessary to bring the property up to its full potential, given its location in the CBD.

Hempel set out to complete over $3.6 million in capital improvements (roof replacements, elevator upgrades, common area upgrades, new fitness center, and conference facilities, etc.) along with $3.5 million in tenant improvements. Ultimately, the property landed several new tenants which brought the occupancy to 84% and stabilized cash flow.

Having reached stabilized cash flow, Hempel recapitalized the property with a different New York based, institutional equity joint venture in late 2013. Canadian Pacific Plaza was recapitalized at a purchase price of $51.5 million. Continued leasing momentum by Hempel’s leasing team increased rental rates and stabilized the property even further to a 99% occupancy rate. This increased occupancy coupled with an expanded parking ramp and corresponding revenue led the partnership to sell the cash-flow rich property in 2015 for $68.5 million.

SOO LINE BUILDING

2011 Purchase

$5.5 million 

2011 SALE

$11.25 million

Canadian Pacific Plaza

2011 Purchase

$23.6 million 

48% occupied 

2015 recapitalization

$68.5 million

99% occupied

SOO LINE BUILDING

ONE FINANCIAL PLAZA 

ONE FINANCIAL PLAZA