The coronavirus has crippled the Chicago hotel industry and now Thor Equities may be in danger of defaulting on its mortgage on the 1,600-key Palmer House Hilton.
The New York-based firm skipped its April loan payment on the $427 million refinance it took out on the property in 2018, Crain’s reported, citing Bloomberg loan data. Thor bought the Palmer House — at 17 East Monroe Street — for $230 million in 2005, and finished a $131 million renovation in 2008.
The CMBS loan has been transferred to a special servicer, signalling the potential for default. Thor failed to pay its $1 million debt service this month on the hotel, Crain’s reported.
Numerous hotels in Chicago have been forced to shutter, and overall occupancy has tumbled to 18 percent, according to the latest figures from hotel data firm STR. Revenue per available room was at $12.78.
More than two-dozen city hotels have CMBS debt of $10 million or more, according to a Crain’s report.
The trend is happening throughout the country. As the pandemic continues to roil the CMBS market, loans on hotel properties have been ahead of the curve when it comes to delinquencies and special servicing. Three massive CMBS hotel portfolio loans, covering 186 hotels — Homewood Suites Chicago Downtown included is among them — with a total outstanding balance of about $2 billion, were among the largest to be transferred into special servicing so far this month. [Crain’s] — Alexi Friedman