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River North Hotel Felix Loan Up for Auction

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The list offers another test of investors’ appetite for struggling hotels downtown as demand in the hospitality sector recovers from the public health crisis. Strong leisure travel over the past few months and a resurgence of large group events at hotels have pushed occupancy and room rates to their highest level since late 2019, allowing hotel investors to bet on a recovery. It’s a sign of potential.

Downtown hotel occupancy averaged 78% last month, up from 59% in July 2021 and slightly below the July 2019 average of 82%, according to hospitality data and analytics firm STR.

However, business travel accounts for a larger share of Chicago’s hotel demand than other large cities, and its recovery has been slow, hampering the recovery of the downtown hotel market. That pushed property values ​​down and triggered a wave of unrest across the market.

Hotel Felix is ​​one of many downtown hotels that have closed due to the pandemic. The property was valued at $23.5 million in July 2020. That’s just a fraction of the $68.6 million valuation that the property’s owner, a joint venture between Chicago-based Oxford Hotels & Resorts and the Getty Group, took out on his loan in 2013. In 2007 he purchased a $24 million ownership venture to cash in a portion of the stake in the property.

Felix was recently appraised at $24.1 million in December, according to Bloomberg data on loans. Mortgages were packaged with other loans and sold to commercial investors backed by mortgages, exposing much of the property’s financial data.

Special servicer LNR Partners, based in Miami Beach, Florida, oversees the loans on behalf of CMBS bondholders. An LNR spokeswoman declined to comment on the proposal.

Paramount is pitching the loan as an opportunity for buyers to complete the foreclosure process and take control of the hotel. In marketing materials, the broker said owners “continue to work with lenders on the transfer of ownership” and that buyers could pursue “potential alternative branding or alternative uses” for the 12-story building. rice field.

Oxford President and CEO John Rutledge said in a statement that the ownership group had already generated “attractive returns” from the 2013 refinancing and that the venture plans to continue owning the property. We were unable to reach an agreement with the lender.

“Even after years of trying to create solutions to overcome the[pandemic-related]challenges at this hotel, including identifying the social service agency that occupies the hotel, as we have done at many other hotels, Regardless, the lender did not agree to any of our proposals,” the statement said. “Therefore, we and our partners reluctantly but voluntarily agreed to an amicable settlement with the lenders.”

The auction, run by commercial real estate auction platform Ten-X, has a starting price of $7.5 million, according to marketing materials.

Hotel Felix’s auction comes as other prominent downtown hotels undergo foreclosure proceedings.

A Cook County judge ruled late last month that the owner of the Palmer House Hilton Chicago, the city’s second-largest hotel, was foreclosed on a $333.2 million CMBS loan. did. This allows a trustee representing the mortgage investor to manage the property through an auction.

Separately, the trustee representing investors in a $203.5 million CMBS loan tied to the JW Marriott Chicago Hotel in the Loop last month placed the sole bidder in the auction to obtain control of the property. submitted.