Sterling Bay is nothing if not optimistic.
Despite the economic woes in Chicago, the development firm on Friday said it landed critical financing for its forthcoming $250 million 47-story hotel and apartment tower project at 300 N. Michigan Avenue.
The developer, arguably Chicago’s most active builder, picked up a $175 million loan from Arkansas-based Bank OZK, according to Crain’s. The bank has funded several other Sterling Bay developments over the years.
Construction on the tower will begin in August, according to the report.
Sterling Bay is developing the tower alongside Magellan Development, which is currently building the nearly 1,200-foot-tall Vista Tower condominium development on Lakeshore East.
The project at 300 N. Michigan includes a 280-room hotel and 289 residential units, plus 25,000 square feet of retail space. Under the agreement, hotel operator CitizenM will purchase the hotel portion when it’s completed, Crain’s reported.
Bank OZK is among the lenders most exposed to Chicago’s real estate market, which has been hit hard by Covid-19. Earlier this month, Goldman Sachs pulled funding on a 74-story condo project on S. Michigan Avenue, developed by Time Equities and JK Equities.
The Arkansas lender has issued hundreds of millions of dollars in debt to back construction projects across the city, and CEO George Gleason signaled last month that it has no plans to pull back on condo projects in cities including New York and Miami.
The outlook for much of Chicago’s hotel market looks poor. Occupancy in Chicago has been under 50 percent, and researchers say it likely won’t recover in full for at least a year. Similarly, the market for Class A units in the second quarter fell by the highest rate since 2017. [Crain’s] — James Kleimann