Oxford Capital and Gettys Group are facing a foreclosure lawsuit on their 225-key Hotel Felix in River North, which began to struggle after its property taxes ballooned.
A venture of Deutsche Bank oversees the CMBS loan. The suit charges the joint venture of the two Chicago developers hasn’t made payments on a $47 million loan tied to the hotel since February, according to Crain’s.
The hotel owners owe $51.4 million as of July 1, including interest and other charges, according to the suit, which was filed June 29 in Cook County court.
Four months ago, a servicer appointed to monitor the loan reported that the hotel owners faced a “critical cash flow crunch” due to falling performance, Crain’s reported at the time.
Oxford President and CEO John Rutledge said in a statement the hotel is in negotiations to try to restructure its debt. Lawyer David Neff of Perkins Coie, which represents the lender, confirmed that negotiations are ongoing.
The hotel in 2016 saw its property taxes balloon to $945,000 from $256,000 two years earlier, a significant blow at a time when Downtown hotel room inventory is growing. Some 6,000 new hotel rooms came online Downtown between 2014 and 2017, according to the city tourism bureau.
The Hotel Felix isn’t the only Downtown hotel struggling: Denihan Hospitality recently sold the James Chicago hotel on the Magnificent Mile to Junius Real Estate Partners for $83 million, almost 40 percent less than what it paid a decade earlier.
Oxford and Gettys bought the property for $24 million in 2007. The joint venture took out a $46 million loan on it, renovated then reopened in 2009 as the Hotel Felix. They took out the $47 million refinancing in 2013. [Crain’s] — John O’Brien