Sterling Bay is unloading Fulton Market’s Hyatt House Chicago

Sterling Bay is unloading Hyatt House Chicago at Fulton Market, hoping it can cash out as new developments come on line.

Sterling Bay hired Jones Lang LaSalle to sell the 200-key hotel at 105 North May Street, Crain’s reported. While the asking price wasn’t disclosed, the hotel was appraised at almost $80 million, or about $400,000 per room, when it opened two years ago.

Fulton Market, the former meatpacking district, is downtown Chicago’s busiest neighborhood.
A total of 40 commercial and residential projects have either been proposed, approved, or are in construction in the district, according to SVN Chicago Commercial.

The sale is a litmus test for how investors weigh the risk of acquiring a downtown hotel as the pandemic-battered hospitality industry struggles to recover from the pandemic.

The city’s hotel revenue from business travelers will probably drop by 86 percent, or about $2.2 billion this year compared with 2019, according to the American Hotel & Lodging Association.

The average occupancy rate at Hyatt House Chicago was just 22 percent last year, translating into negative net cash flow of about $563,000. This figure is well below the $2.1 million Sterling Bay owed in debt service for that year, which could make it hard for a buyer to justify paying close to the property’s appraised value.

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Gold Coast hotel changes hands reflecting hotel industry’s pandemic recovery

Sterling Bay took a net loss when it sold the Talbott Hotel for $55 million this month. Sterling Bay, Geolo Capital and Wanxiang America Real Estate Group acquired the 178-key hotel for $51 million in 2015 and had invested $67 million in the property.

[Crain’s] — Connie Kim