The money is in. Inland Real Estate Investment Corporation has fully subscribed and closed an approximately $28 million equity raise for Office Conversion Opportunity Zone, LLC, a qualified opportunity fund sponsored by an affiliate of Inland Investments. The fund maintains about 89 percent ownership in 386 Wabasha Street North, a 16-story downtown St. Paul office building being redeveloped into The Stella: 178 apartments and 2,338 square feet of street-level retail. Planned unit finishes include quartz or granite countertops, stainless steel appliances, in-unit washers and dryers, and nine-foot ceilings; the amenity package includes a fitness center, rooftop deck with grilling stations, a spa room with an outdoor jacuzzi, and clubhouse and lounge spaces.
The timing matters. Office-to-residential conversions often stall before construction because the capital stack—equity, historic credits, debt—has to land in the right order. Inland reports the project is supported by historic tax credits and other financing structures. The announcement does not disclose total project cost, debt amount, or projected return. What it does establish is that the equity layer is now closed, which is the gate that usually has to clear before the rest can perform.
Matthew Fries, president and CEO of Inland Investments, describes the deal as a response to shifting office demand and growing demand for urban living. But the structure reveals the real pressure: an underutilized office conversion needs patient, tax-advantaged capital willing to carry construction and lease-up risk. The 89 percent interest means Inland's fund is not a passive minority investor. It is effectively the capital sponsor.
The operating cast is disclosed: Kaeding Development Group is the development partner, R.E.C. Inc. d/b/a Ron Clark Construction & Design is the general contractor, and Bader Management is the property manager. Inland identifies this as the sixth project in partnership with Kaeding. That record does not guarantee delivery, but it means the development team has worked together before. The next observable test is not another capital close. It is whether The Stella moves through construction and lease-up on schedule and reaches stabilized occupancy without a disclosed funding gap.