Hilton Chicago Magnificent Mile transferred to lender amid pandemic struggles

Facing $70M in debt, owner Procaccianti Cos. hands keys to LNR Partners via deed-in-lieu of foreclosure

Hilton Chicago Magnificent Mile Suites and Procaccianti Companies CEO James Procaccianti (Facebook, Procaccianti)
Hilton Chicago Magnificent Mile Suites and Procaccianti Companies CEO James Procaccianti (Facebook, Procaccianti)

As pandemic-disrupted travel plans continue to afflict downtown hotels, one owner has been forced into an early check-out.

Rhode Island-based real estate investment firm Procaccianti Companies is transferring ownership of the 345-key Hilton Chicago Magnificent Mile Suites to LNR Partners, special servicer on a $77.2 million loan on the property, via a deed-in-lieu of foreclosure, Crain’s reported.

Procaccianti stopped making loan payments shortly after the pandemic, which hit less than seven months before its debt on the 30-story hotel at 198 East Delaware Place was due to mature. Its current loan balance is just under $70 million, according to Crain’s, citing data from Bloomberg.

After the payments stopped, LNR Partners started collecting the hotel’s cash flow and disclosed in July that it was hammering out a deal with the hotel owners to transfer ownership. The hotel’s finances were not looking good even before the pandemic, generating less than $4.4 million of net cash flow in 2019 off of $20.9 million in revenue, less than the $4.9 million Procaccianti paid to service its debt, according to Crain’s.

Sign Up for the undefined Newsletter

Neither Procaccianti nor LNR Partners responded to The Real Deal’s requests for comment.

Procaccianti bought the hotel as part of a larger portfolio in 2005 and spent nearly $16 million renovating it before it refinanced the property with the current mortgage in 2015, according to Crain’s. At the time, the hotel was appraised at $112.4 million.

Downtown hotels have been defaulting on loans as the slow return of tourists and business travelers have kept occupancy rates down.

A partnership of Oxford Capital Group and Gettys Group defaulted on a combined $70 million in loans on the Hotel Felix and Holiday Inn Express Chicago Magnificent Mile in March. The owner of the JW Marriott Chicago also defaulted on a $203.5 million loan after failing to make its debt payments since February.

[Crain’s] — Connie Kim