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Signia Hotel Rendering

Source: Rendering Courtesy of Ratio and Kite Realty Group Trust

INDIANAPOLIS, Ind. — The city of Indianapolis is taking over the financing of Kite Realty Group Trust’s redevelopment of Pan Am Plaza. The move will cost the city at least $510 million, and probably more, to build a 40-story hotel tower on the site starting this summer.

The Signia by Hilton hotel will have 814 rooms, and the city will own it and the associated meeting space. Kite will stay on as the project’s developer. The Signia is part of a wider redevelopment of the Pan Am block, which includes a $200 million expansion of the Indiana Convention Center that the city is financing.

City officials said rising interest rates and a tightening commercial lending market meant Kite couldn’t obtain financing for the project under terms it considered reasonable. Under the new deal, Kite will still develop the site but will have no financial or ownership stake in the project once it’s completed.

The city will own the property and expects to hire an asset manager to oversee the building. Hilton will manage the hotel and its event spaces, much as it does for the Kite-developed Conrad Indianapolis luxury downtown hotel.