Holiday inn

Holiday Inn & Suites next to Old Post Office sells to Chicago company

LXG declined to comment on the price, but the company said it raised more than $20 million from dozens of investors for the all-cash acquisition. A spokesperson for the seller, a company controlled by the estate of late Chicago investor Leslie Barnard, declined to comment on the sale.

The deal ends a long-running ownership battle over the five-story property and adds it to the short list of downtown hotels that have swapped since the start of the crushing COVID-19 pandemic. hospitality. LXG also joins the mix of property investors looking to capitalize on the thousands of workers who are expected to descend on the old post office every day when the crisis subsides.

“The day we get past COVID and things start to start again, this area will be like the next West Loop,” said LXG partner Sanjay Patel. “We’ve been eyeing this property for a long time and finally had the opportunity to dive into it.”

Other investors might also have been interested in buying the hotel in recent years, as tourism to the city increased and businesses flocked to the city center, fueling a boom in hotel development. But the property was stuck in a legal battle that began in 2013, several months after Barnard’s death. His estate and longtime business partner Benitta Berke fought for years over the terms of a decades-long partnership that included ownership of the Holiday Inn and other properties, according to Cook County court records. .

The feud lasted longer than the 2016 maturity of a $9 million loan on the hotel, which could not be sold or refinanced amid ongoing litigation. This sparked a 2018 foreclosure complaint filed on behalf of bondholders in the mortgage, which had been bundled with other loans and sold to investors in commercial mortgage-backed securities.

The owners eventually settled the dispute in 2019 and repaid the remaining $5.3 million balance on the amortized loan, according to a Bloomberg report related to the loan. The sale of the hotel was part of the settlement, according to Chicago attorney Jeffery Heftman, who represented the Barnard Estate.

The COVID-19 crisis has complicated the sale as investors grapple with how to value any hotel property in the fog of the pandemic and a deep recession. But LXG finally struck a deal to buy it late last year, starting its first hotel purchase in downtown Chicago. The company also owns a Holiday Inn near Midway International Airport.

LXG is planning a full renovation of the 61-year-old hotel, which got its last major update in 1999, according to Bloomberg data. The company, which includes its own construction company and hotel management group, plans to keep the hotel a Holiday Inn and upgrade its lobby and restaurant, all guest rooms and rooftop pool. The hotel will remain open during the renovation, which is expected to be completed by the end of 2022, said LXG partner Jamail Virani. “Once the market is balanced post COVID, we will have a fully refurbished asset,” he said.

The property performed well coming out of the financial crisis, doubling its net operating income between 2010 and 2015 to nearly $2 million on $8.4 million in revenue, according to Bloomberg data. Patel said LXG was also impressed with its performance during the pandemic, thanks in part to the band’s long-standing commercial contracts. The property had averaged more than 60% occupancy since March, he said. That dwarfs the entire downtown market, where average occupancy hasn’t topped 27% for a single week since the pandemic began, according to hotel research firm STR.

The revival of the area around the hotel was also a key selling point. In addition to the Old Post Office, where companies like Walgreens Boots Alliance, Uber, PepsiCo and other major tenants have signed major leases, the 50-story BMO Tower is under construction a block north. of the hotel. And the developer behind the Old Post Office renovation is also renovating a vacant 680,000-square-foot south office building at 801 S. Canal St., where it hopes to attract business.

LXG is betting that the development will increase hotel performance and there will be a travel boom after the pandemic ends, and they want to be able to take advantage of that.

“We believe that even though hospitality is badly affected today, once it bounces back, it will bounce back with a vengeance,” said Patel, who expects the hotel to sell rooms for more than $180 a night after. its renovation.

Very few downtown hotels have changed hands since the onset of the crisis, given the decimation of values. The Waldorf Astoria Chicago was sold in November to Morningstar founding billionaire Joe Mansueto for around $55 million, less than half of what it sold in 2015. The St. Jane Chicago, formerly the The Hard Rock hotel on Michigan Avenue was sold in September to a joint venture between luxury hotel company Montage International and Mexican owner RLH Properties for less than the value of the debt the sellers owed on the property, records show. public.


Source link