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.
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.
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