Weinstock’s Monarch buys River North hotel out of distress

The winning bid at auction hands a loss to holders of CMBS debt

Monarch's Michael Weinstock with Hotel Felix at 111 West Huron Street (Monarch Alternative Capital, Google Maps)
Monarch's Michael Weinstock with Hotel Felix at 111 West Huron Street (Monarch Alternative Capital, Google Maps)

A hotel in distress led to a win for Michael Weinstock.

His Monarch Alternative Capital bought debt against the Hotel Felix in Chicago’s River North out of distress for $29 million, resulting in a shortfall on a 2013 loan against the property.

Monarch picked up the mortgage on the 228-room property, which secured a $47 million commercial mortgage-backed security loan nine years ago, CoStar reported. At the time, the property was appraised at $69 million, according to data tied to the CMBS loan. ​

The deal was struck two years after the Felix’s owner, a venture of Chicago-based hotel investors Oxford Hotels & Resorts and Gettys Group, were hit with a foreclosure lawsuit alleging they failed to make payments as the pandemic bludgeoned the lodging industry across the world.

With the purchase of the mortgage, Monarch is positioned to finish the foreclosure and take control of the property.

Oxford said it generated a return on its investment in the property with its 2013 refinancing.

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It tried to work out a solution to the loan trouble with the special servicer overseeing the mortgage on behalf of bondholders in the CMBS loan, Florida-based special LNR Partners. Oxford suggested reaching out to social service organizations to occupy or use the hotel during the pandemic, as it did at other properties, but the lender didn’t agree with the ideas.

Hotel Felix isn’t the first, or biggest, Chicago hotel to be sold at auction amid a foreclosure lawsuit during the pandemic.

The 610-room JW Marriott on LaSalle Street was sold at auction in July after Orlanda-based investment firm Estein USA defaulted on a $204 million CMBS loan, setting up the property to be transferred to the loan’s senior bondholders.

Also in July, a Cook County judge ordered foreclosure on the Palmer House Hilton hotel property in the Loop and put it on track to be sold at auction.

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