The town of Speedway on Friday said it is considering offering a $2.5 million short-term construction loan to the developer of the long-delayed Wilshaw hotel project across from Indianapolis Motor Speedway.
The loan would cover a small gap in funding for Atlanta-based Hotel Equities Group, which has not yet finalized its financing for the $35 million hotel project at the southeast corner of 16th and Main streets.
The firm acquired the project from local developer Loftus Robinson in November 2021—after extensive delays caused by Loftus’ inability to secure its own financing deal—and is now leading the project alongside affiliate firm 33 Degrees.
Plans for the 126-room hotel were first announced in December 2015 with an original expected opening date of 2018.
The development team, organized through holding company HE Speedway Owner LLC, is expected to repay the full amount, plus interest, on either a two- or three-year term—the closing for which would coincide with the general construction loan on the project.
The town’s loan, which would use revenue from Speedway’s tax-increment financing district, would be contingent upon the holding company securing funding for the rest of the project. The loan will be offered with a near or above-market interest rate, Speedway Town Manager Grant Kleinhenz said.
“The current economic climate with inflation, rising interest rates, and higher costs due to supply chain disruptions poses a unique set of challenges across all market sectors, including hospitality and tourism,” Kleinhenz said in written remarks. “This short-term loan is a creative financing tool to build this hotel, which we believe continues to be the highest and best use for this site.”
An ordinance is set to be introduced during the Feb. 27 Speedway Town Council meeting to authorize a loan agreement. It’s expected to have a second reading during the March 13 meeting, with the town and development team set to come to final terms upon its approval. The Speedway Redevelopment Commission must also approve certain portions of the agreement.
The developer is “still working to secure their financing—they’re close, but they need a bit more time—but the town feels like us moving ahead at this point gives confidence to that proposed lender,” he told IBJ. “Based on their track record and experience … it gave us confidence that we could go ahead and partner, in essence, with them on this loan to make this project move ahead.”
Hotel Equities has a portfolio of more than 210 hotels in the United States and Canada, including 10 in Indiana. If completed, the Wilshaw is expected to carry the upscale Hilton Tapestry brand.
The site has been mostly inactive since work ceased in July 2019, with Loftus Robinson later withdrawing from the project, even after bringing in another developer—Indianapolis-based MHG Hotels—to help secure funding. The projected completion date was delayed to early 2023 after Hotel Equities became involved. An updated timeline, taking into account the developers’ current financing situation, hasn’t been finalized.
The Wilshaw project has undergone several inspections since it was acquired by Hotel Equities to ensure the structure already erected on the site has remained sound. Kleinhenz told IBJ there are no concerns about the steel or concrete, with work expected to resume soon after financing closes—likely later this spring.
Speedway officials and residents have been flustered by the project’s lack of movement in recent years, Kleinhenz said, but there is optimism the loan will be a push in the right direction. But while the town is committed to getting work done on the site, it wasn’t interested in giving a lump sum of cash—instead, viewing the project as an investment.
“From our perspective, we’ve already put a lot of time, effort and dollars into this project over the past three years,” he said.”Making it a loan was something everyone from the town side [agreed upon]. It needed to be a partnership, and not a gift.”
The name the project, Wilshaw, was chosen to honor Wilbur Shaw, the last Indiana native to win the Indianapolis 500, which he accomplished for the third and final time in 1940.