A real estate investor from Oklahoma is buying two distressed hotels in the Chicago suburbs on a bet that the lodging industry is on the post-pandemic upswing.
A venture led by real estate investor Mark Beffort bought the 269-room Hilton Orrington in downtown Evanston for $34 million and agreed to buy the 408-room Westin Chicago Northwest in Itasca, Crain’s reported. The Westin’s price wasn’t released.
The deals are the largest distressed hotel sales in the Chicago area since the beginning of the pandemic. As occupancy rates rise almost to pre-pandemic levels thanks to the return of large group gatherings and leisure travel, room rates have surpassed 2019 levels.
The Beffort venture bought the Evanston hotel in a consensual short sale, meaning the owner sold the property for less than the value of the debt tied to it with the approval of the lender. The previous owner, Olshan Properties, faced a foreclosure lawsuit last year after allegedly defaulting on its $40 million loan.
The $34 million purchase price is less than the almost $39 million loan balance that remains on the Evanston property. It’s also significantly less than the $60 million that Olshan paid for the hotel in 2015.
The Westin Chicago Northwest in Itasca is being sold by its lender Oceanview Commercial Mortgage after a contentious legal battle with its former owner GF Hotels & Resorts. It is unknown how much the Beffort venture paid for the property, but its debt was more than $31 million.
In Chicago itself, distressed hotels have been hitting the auction block. Last month, Wells Fargo bought the JW Marriott from Orlando-based investment firm Estein USA for $251 million as the sole bidder for the property.
A Cook County judge also last month issued an order of foreclosure against New York’s Thor Equities for defaulting on its $333.2 million mortgage on Palmer House Hilton Chicago. The order clears the way for the 1,635-room property, the city’s second-largest after the Hyatt Regency, to be sold for a fraction of its pre-Covid value.
Earlier this month, the distressed $44.7 million mortgage on the 228-room Hotel Felix in River North was also marketed for sale, more than a year after the property’s owner was served with a foreclosure suit.
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Suburban Chicago hoteliers take losses, cut prices for deals
— Victoria Pruitt