JW Marriott Chicago hits auction block months after foreclosure

A downtown hotel is set to hit the auction block four months after its foreclosure.

The 610-room JW Marriott Chicago hotel at 151 West Adams Street will be available for auction through a sheriff’s foreclosure auction on July 8, Crain’s reported. A Cook County judge issued the foreclosure notice against the owner, a venture of Orlando-based Estein USA, after it defaulted on a $203.5 million loan for the hotel.

While an investor could bid on the 16-story building, it’s more likely the lender, Wells Fargo, will retain the property with a “credit bid” equal to the value of the loan, allowing the bank to take title to the property.

The hotel is among the largest downtown properties to go through the foreclosure process since the pandemic spurred financial struggles for property owners. Downtown hotel occupancy rates have been on the rise recently, boosted by relaxed Covid restrictions and the return of conventions and group events.

Those occupancy rates likely contributed to the JW Marriott Chicago’s increase in value, which stood at $256 million in March, well below its $370 million appraised value when Estein took out the loan in 2017.

Estein took steps to keep the hotel at the beginning of the pandemic. It negotiated two forbearance agreements with Rialto Capital, the special servicer hired to oversee the delinquent loan. Estein tried and failed to negotiate a third deal earlier this year.

The JW Marriott Chicago is one of many hotels in the city tied up in CMBS loans and other owners are also facing similar problems. The owners of the Palmer House Hilton Chicago, the Hotel Helix and the Holiday Inn Chicago Magnificent Mile all face potential foreclosure complaints.