Hilton Worldwide is no longer branding the Conrad Chicago hotel on the Magnificent Mile as its ownership faces a foreclosure lawsuit.
The hotel brand exited its partnership with the 289-room property at 101 East Erie Street earlier this month, after the building closed in April 2020, Crain’s reported.
The move was described by the company in a statement to Crain’s as an “amicable” termination of Hilton’s partnership with the property’s owner, a joint venture of hotelier Laurence Geller and Wanxiang America Real Estate Group, the outlet reported.
It comes more than a year after the joint venture was served in a foreclosure lawsuit that alleges the partnership defaulted on its $70 million loan on the property, with the complaint still pending in Cook County court, according to Crain’s.
The Conrad’s owners are far from alone in facing financial distress over Chicago hotel properties. Around 51 percent of the city’s hotels are at least 30 days delinquent or in special servicing, a step toward resolving a debt, often by a sale, putting the city sixth in the nation, The Real Deal reported last month, citing Cred IQ, a firm that tracks commercial mortgage-backed debt.
Chicago’s hotels have been recovering from the pandemic at a slower pace than the national average, hobbled by a sluggish comeback for trade shows and business travel, which account for as much of a fifth of downtown hotel bookings in a typical year, The Real Deal reported this month.
Downtown hotels ended 2021 at an average occupancy rate of 43 percent, up from 27 percent in 2020 and nowhere near the pre-pandemic rate of 74 percent, The Real Deal reported. Nationwide, the average was 58 percent compared with 66 percent in 2019.
The partnership’s lender, Washington D.C.-based Union Labor Life Insurance, has been trying to sell the loan to prospective buyers to try to resolve the matter, Crain’s reported, citing sources familiar with the offering.
The Conrad opened in 2016 following Geller and Wanxiang transforming former offices in the Erie Street structure into lodging. That was after it bought the offices of an advertising agency in 2014 for $34 million, Crain’s reported. The owners took out a $70 million loan in 2015, the outlet reported.
Geller and Wanxiang also partnered in 2015 to buy the Waldorf Astoria Chicago hotel – which they later lost – in the Gold Coast for almost $112 million, then a record-high price paid for a hotel in the city, according to Crain’s. They turned over the property in 2019 to their lender, and it was sold in 2020 as hotels were being decimated by the pandemic for just less than $55 million to Joe Mansueta, a billionaire, Crain’s reported.
[Crain’s] – Sam Lounsberry
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