Former hospital turned apartment complex receives $2.2 million in refinancing

REDWOOD FALLS, MINN. – A project in southwest Minnesota that converted a hospital into housing will receive $2.2 million in refinancing.

Red Skye Lofts, which had been a hospital in Redwood Falls that sat unused for three years, received the loan from PACE Equity, the Milwaukee-based company announced last week.

The Commercial Property Assessed Clean Energy refinancing loan offers funding for the project’s budget, which for Red Skye Lofts included lighting and HVAC equipment upgrades, the announcement said.

Turning a hospital into apartments isn’t unprecedented, as communities in southwest Minnesota struggle with housing shortages, said Emily Hentges of Plaid Hat Management, which manages Red Skye Lofts.

The Mankato-based company manages other properties in Minnesota recently converted into housing, including a grocery store in Albert Lea converted into an apartment building and a former mall in Le Sueur that’s now mixed-used housing.

The city of Redwood Falls sold its area hospital in 2019 to CentraCare Health System Inc., which moved to a new location in February 2021.

Redwood Property Holdings bought the building in July 2021 and after some $6 million in renovations, converted much of the hospital into apartments, City Administrator Keith Muetzel said Thursday.

The project received a 15-year tax abatement agreement with Redwood Falls, allowing developers to avoid 100% of their annual property taxes during that period.

The apartment complex has 46 units and began accepting renters this July.