Meet the man who’s betting big on the Minneapolis Armory
February 8, 2016
By Burl Gilyard : MinnPost : February 8, 2016
Photo: In July of 2015, Abdul paid $6 million for the Minneapolis Armory with plans to overhaul it into an event center near the new Vikings Stadium.
From the editors of Twin Cities Business:As the February issue of Twin Cities Business was hitting the newsstands, a wrinkle developed for Ned Abdul’s plans to overhaul the Minneapolis Armory into an event center. On January 19, the city’s Heritage Preservation Commission voted to nominate the property as a local historic landmark. City staff were concerned that some of Abdul’s proposed changes would damage the historic character of the building.
The vote grants interim protection to the property, which hampers Abdul’s ability to make big changes. According to the city’s staff report, interim protection is “to protect a nominated property from destruction or inappropriate alternation during the designation process.”
Abdul’s timeline for the project could be changed: Interim protection can be in place for up to 18 months. The commission’s vote also calls on the city’s planning director to prepare a designation study of the Armory. Ultimately, the Minneapolis City Council has to vote on the proposed designation.
“It’s part of the process. These things happen,” said Jon Austin, who handles public relations for Abdul. “This business is full of unexpected developments and changes. The track record of this company is an ability to deal with that when they come up.”
Austin added: “We want to continue to work with the city, but we’ll also need the flexibility to redevelop the Armory.”
The fortress-like Minneapolis Armory is not the most inviting piece of real estate. Built in 1935 to serve as a training and recreation facility for the Minnesota National Guard and Naval Militia, it also was used for civic events through the early 1980s, including trade shows, political conventions, concerts and sporting events, before being turned into a parking garage. Today, among the shiny towers rising in the new Downtown East, it sticks out like a cement airplane hangar that has seen better days.
Ned Abdul got his start in the real estate business in 1992, when he purchased a home in north Minneapolis for less than $2,500 and then remodeled and sold it.
House flipping gave way to purchasing commercial buildings by the early 2000s.
Today, he is tackling large commercial properties, doing multi-million-dollar deals in downtown Minneapolis and working to convert the Minneapolis Armory into an events center.
It’s also a prime redevelopment opportunity, given its location two blocks from the new US Bank Stadium, a block from two new Wells Fargo office towers, and just across the street from the planned $22 million Downtown East Commons park.
Attempts to redevelop it in recent years have fallen through. But it was acquired this past July for $6 million by Ned Abdul, a tireless local real estate developer with a reputation for rolling the dice on challenging real estate bets.
Downtown deal-watchers say that Abdul’s track record gives them confidence he will succeed in his plans to refurbish the armory and transform it into a new event center. But few know much about him—you won’t find him hanging out with local business leaders at breakfast meetings, musing about the future of downtown. There have been few substantial news stories about Ned Abdul over the years, and there’s only one photo of him on the Internet.
The man behind the armory’s future
Abdul—whose full name is Nedal Yusuf Abul-Hajj —has spent years carving out a niche tackling tough properties and finding opportunities where others have only found roadblocks.
Deal by deal and brick by brick, he has quietly risen from his days of flipping houses in north Minneapolis to become a bona fide player in the intensely competitive arena of commercial real estate. In a business where many commercial properties are owned by large, far-flung funds or real estate investment trusts, Abdul is something of a one-man band, working out of his Swervo Development Corp. office in the Minneapolis Warehouse District, with support from a small staff.
Last May he raised a few eyebrows when he sold a portfolio of three downtown Minneapolis buildings—including the rehabbed 510 Marquette, 300 First Ave. N. and 123 Third St. N. —for $87.5 million to San Francisco-based Spear Street Capital. The sale reportedly represented just 10 percent of Abdul’s property portfolio. In the wake of that sale, he rolled up his sleeves for his latest round of real estate turnarounds.
In Minneapolis’s North Loop, Abdul is remaking and expanding the vintage Western Container building at 500 Third St. N., slated to be the future headquarters for Arctic Cat Inc. The publicly traded recreational vehicle maker, which reported sales of $698.8 million for fiscal 2015, will relocate its corporate office from Plymouth.
In the Warehouse District, Abdul is luring another suburban office tenant to downtown to the Nate’s Clothing building, which has been sitting empty for years under various owners, as redevelopment plans have come and gone. Abdul acquired that building for $4.15 million in July, the same month that he closed on the armory. Chicago-based Coyote Logistics, which has been a tenant in Abdul’s Northland Corporate Center in Brooklyn Park, will lease 35,000 square feet at the downtown building. Jon Austin, who is handling public relations for Abdul, says that the remainder of the building has been leased to another tenant that “will be announced later this year.”
Minneapolis Armory Downtown EastAbdul paid $6 million in July 2015 for the vintage property with plans to overhaul it into an event center near the new US Bank Stadium.
Western Container Building North Loop, MinneapolisAbdul acquired the building with other properties in August 2005 and once floated condo plans here. Abdul is now expanding the building for Arctic Cat Inc., which will move its corporate headquarters there this summer.
510 Marquette Downtown MinneapolisAbdul paid $6.7 million for the building in March 2013 when it was 90 percent empty. His renovation drew new tenants: Mithun, RedBrick Health and Weber Shandwick.
Nate’s Clothing Building Warehouse District, Minneapolis.Abdul acquired the long-vacant building for $4.15 million in July 2015. He is drawing Coyote Logistics and another as-yet-unnamed office tenant to the building.
Uptown Theater Minneapolis;Abdul paid $1.4 million for the iconic Uptown property in December 2009. A $2 million renovation was completed in 2012.
Walker Library Uptown, MinneapolisAbdul acquired the original, vintage library building for $1.5 million in December 2014. Plans have not yet been revealed.
And then there’s the armory. “If the vision as I understood it comes true, it’s just going to be a tremendous asset,” says Steve Cramer, president and CEO of the Minneapolis Downtown Council. He toured the property in late December and says that he understands the plan to call for an event center, which can accommodate up to 5,000 people, complete with private suites and skyboxes.
Asked to confirm those plans, Austin adds: “I’d say it’s at least 5,000 people. Could be more, but as we’ve said, plans continue to be in development.” As of early January, detailed plans for the project had not yet been submitted to the city, but City of Minneapolis spokesman Matt Lindstrom said that permits were pulled last summer to repair the roof, do some interior demolition and repair work, and to repair and replace exterior windows.
“I think he’s been very successful in real estate in downtown. I think he’s well capitalized,” Cramer says of Abdul. “He’s spending money and he’s got a track record of success with the buildings that he’s repositioned.”
Abdul declined several requests to be interviewed for this story at this time; Austin says he would prefer to wait until after the armory plans are firmer.
Doug Hoskin, a principal with Interstate Parking, acquired the armory in November 1998 and had been working on his own plans, with a proposed budget of $35 million, to renovate and turn the building into an event center. “I could not get enough financial commitments from prospective users in order to finance the project,” he says. He also looked at options for a hotel, housing and office space at the armory.
Hoskin says that he had not been looking to sell the armory; then David Shea of Minneapolis-based design firm Shea Inc. introduced him to Abdul. “He was very straightforward and said ‘I would like to buy it from you—what would it take?’ … It was a very fast and fluid transaction,” he says.
Hoskin says that they hammered out an agreement to sell the property in June and the transaction closed about a month later. From Hoskin’s perspective, it was a smooth deal.
“I’d do a deal with him any day of the week,” says Hoskin. “I have a great deal of both admiration and respect for Ned.”
Tough to beat
Despite his real estate acumen, Abdul is not without his rough edges. Several real estate professionals flatly refuse to discuss him and his businesses. But even those who may be wary of Abdul have a grudging respect for his real estate instincts.
Many have not forgotten when agents of the Internal Revenue Service and the U.S. Postal Inspection Office raided Abdul’s home and office in May 2010, prompting a flurry of local media coverage. The feds were also looking at John Barlow, a partner with Abdul in downtown Minneapolis nightclubs.
Reports in the Star Tribune at the time said that federal agents were looking into allegations that the pair was skimming money from the clubs, with more allegations of possible money laundering and tax fraud. (The Karma nightclub, in which Abdul and Barlow were partners, closed its doors in 2011 after clashes with the city because of a number of calls to police reporting violent incidents there.)
But two years later, the potential federal case fizzled out; the feds never filed charges against Abdul. Ultimately the case underscored another aspect of Abdul’s story: He’s tough to beat.
During his days flipping homes, California-based WMC Mortgage Corp. filed suit against Abdul and others, alleging that he was responsible for getting the lender to make inflated loans on north Minneapolis homes that Abdul was reselling. But the case was dismissed in September 1999.
Former NHL player Brian Lawton sued Abdul and others in 2010, alleging fraud over two real estate deals where he had invested in properties that Abdul was selling in Wisconsin and Michigan. But once again, the case was dismissed in 2011.
Abdul was cited for carrying a pistol without a permit in 1996. In 2013, he pleaded guilty to a gross misdemeanor on domestic assault charges, according to court records. But his most common run-in with the law is speeding. Court records detail dozens of speeding tickets over the years.
One of Abdul’s companies sued the city of Minneapolis in October 2010, after wrangling over development plans for the Western Container building. Abdul ultimately beat City Hall. In September 2013, the Minnesota Supreme Court sided with Abdul, ruling that because the city took more than 60 days to approve or deny Abdul’s zoning request, the city’s denial was moot. Construction is underway on the building.
Arctic Cat will occupy the entire 55,000-square-foot property and is slated to move in this summer. In a September statement announcing the move, Arctic Cat president and CEO Christopher Metz said, “The Minneapolis North Loop is an historic and trendy warehouse district, making it a terrific complement for our iconic brand.”
Laying the foundation
Today Abdul is buying and selling prominent Minneapolis properties for millions of dollars. But he got his start in the 1990s with much smaller deals: buying, rehabbing and reselling residential properties in urban neighborhoods. According to a 2002 profile in the Minneapolis-St. Paul Business Journal, Abdul began by buying a single-family home in north Minneapolis in 1992. He paid less than $2,500 for the property as the economy was emerging from a recession.
But even back then, Abdul seemed to have a knack for the deal. As he built his business, he began buying larger packages of foreclosed properties from banks. From there Abdul eventually began to turn his attention to commercial properties, which are more complex and expensive deals. Then, as now, he always seemed drawn to deals with challenges: older buildings in need of fresh ideas and new investment.
One early example of Abdul’s commercial deals was his acquisition of the former Schlampp’s Building in south Minneapolis. According to Hennepin County property records, in November 2002 an Abdul entity paid $1.2 million for the property at the northeast corner of Hennepin Avenue and Lagoon Avenue, in the heart of the bustling Uptown neighborhood.
Abdul overhauled the tired property and drew new restaurants to the corner. More recently Abdul overhauled the property again: it’s now home to Cowboy Slim’s bar and restaurant, which opened there in 2015. Abdul also owns the nearby Uptown Theater property and the original Walker Library, for which he paid $1.5 million in December 2014. His plans for the vacant vintage library are not clear.
Veteran commercial real estate broker Mark Kolsrud, who specializes in brokering building sales, has been involved in several transactions with Abdul and praises his instinctive acumen for quickly sizing up potential real estate investment deals.
“He can look at a deal and know if it’s a deal or not a deal very quickly. He has a reputation of following through with that on-the-spot decision,” says Kolsrud, senior vice president with the local office of Colliers International. “He’s a very smart guy… He works hard,” he says. “Most people need an elaborate set of analyses to make a good decision; he can do it in his head.”
Kolsrud also notes that Abdul is no overnight sensation, but has been building his business for years.
“He’s been doing this for 20 years and it’s a little at a time,” says Kolsrud. “He’ s been adding to his portfolio a little at a time for 20 years.”
A 2004 profile of Abdul in the Skyway News newspaper dubbed him “The Phenom.” Although Abdul spoke to a reporter for the story, he declined to be photographed; he also declined to be photographed for the 2002 Business Journal story. He summed up his philosophy for tackling challenging buildings: “If there’s no negative in a property, there’s no opportunity,” Abdul told Skyway News. “Risk reaps reward.”
“He’s one of the best real estate minds that I work with,” says Steve Shepherd, a vice president at Colliers International who does brokerage work for Abdul. “He’s a very shrewd real estate decision maker.”
Real estate veteran Steve Minn recalls buying a property in northeast Minneapolis from Abdul about a decade ago, during the condo craze. Minn, a principal with Minneapolis-based Lupe Development Partners, developed the project into the 47-unit Madison Lofts property.
Minn recalls that Abdul had a knack for forging relationships with people who had owned buildings for decades. Abdul would pay them a solid price, but then turn around and sell it to a condo developer at a nice markup.
“He was very savvy, ahead of the market,” says Minn. “He’d turn around and flip them … he took none of the condo risk. Ned did very few condos himself.”
In one case, Abdul acquired the Sexton Building in downtown Minneapolis for $4.7 million in 2004. In 2005, as condo fever reached its peak, he turned around and sold it for an eye-popping $12.4 million.
The Madison Lofts project turned out to be tough for Minn as the condo market cooled. But he has no regrets about the deal with Abdul.
“I’d do business with Ned in heartbeat,” says Minn. “His handshake is a contract.”
The future of Downtown East
Despite his apparent aversion to the limelight, the Minneapolis Armory project is a high-profile roll of the dice for Abdul.
City leaders are clearly watching as money pours into Downtown East. US Bank Stadium is a $1.1 billion project. Projects that have been developed or are in the pipeline from Minneapolis-based Ryan Cos.—including office towers, a hotel and new apartments—total $450 million. Fundraising continues for the $22 million Downtown East Commons, the green space adjacent to the armory. Where will Abdul fit into the neighborhood?
“With all the great things going on in Downtown East, I am eager to see the armory being redeveloped,” says Minneapolis Mayor Betsy Hodges via email.
But Abdul’s precise plans for the space are not yet clear. And it remains to be seen how many and what type of events the rehabbed armory can draw to downtown’s emerging east side.
Lester Bagley, executive vice president of public affairs and stadium development for the Minnesota Vikings, says that team representatives met with Abdul in the fall to get a briefing on the armory project. But Bagley says that the team has its hands full with stadium and the surrounding plaza.
“We have not zeroed in on the armory itself or how that event center would interact with our game-day experience,” says Bagley. “We have not really factored in the armory into our planning. We have enough on our plate.”
But in contrast to past armory plans, Bagley notes, “It seems with Mr. Abdul that it is proceeding.”
Given his knack for making lemonade out of real estate lemons, it’s tough to bet against Abdul’s instincts for renewal and redevelopment.
“We think this is a unique property in the Twin Cities in terms of size, location and the range of events it can handle,” Abdul’s spokesman Jon Austin said in a previous TCB report on this project. “There’s great potential to work with all of our new and anticipated neighbors. We want to talk to all of them.” tcbmag