Longtime Chicago hotelier Su-Mei Yen is facing a lender’s foreclosure lawsuit over a $20 million loan against a property in downtown Evanston.
It’s at least the second lawsuit over an alleged loan default she’s had to defend in the past year, with the disputes over loans that total $35 million. The most recent complaint was filed in Cook County court in the midst of her settling a separate federal complaint filed in a Georgia federal court over nonpayment of two loans against Chicago-area hotels, including the Whitehall in the Gold Coast, totaling $15 million.
The 259-room Holiday Inn at 1501 Sherman Avenue also marks at least the second hotel in downtown Evanston to face foreclosure amid the pandemic, after the Hilton Orrington was hit with a foreclosure over a $40 million loan against it and then sold for sold for a loss in August to Oklahoma investor Mark Beffert at a price of $34 million.
Auction sales are set for several Chicago-area hotel assets distressed by the pandemic and the depletion of their owners’ reserves that they relied on to make it through the health crisis. One already occurred earlier in September for the River North property Hotel Felix, which was scooped up for $29 million by Monarch Alternative Capital last month at auction after the previous owner defaulted on a $47 million loan against the property.
Yen immigrated from Taiwan in the 1970s and was one of few Asian-American women in the 1990s buying highly-leveraged hotels without the support of pooled funding organized through groups such as the Asian-American Hotel Association, according to a 1994 Chicago Tribune report. She has owned the Whitehall Hotel in Chicago’s Gold Coast since 1992.
The Whitehall and the Evanston property were subjects of a complaint brought by the lender, Access Point Financial, in the U.S. District Court in Atlanta last year.
That suit alleged Yen and her business partner husband, Hui Hsien Yen, failed to repay loans that went into default in 2020 — a $10 million loan for the Whitehall Hotel and a $5 million loan for the Holiday Inn. The defaults resulted in a series of forbearance agreements that culminated in a final agreement in June 2021 and expired in September 2021, at which time the loans became due.
The case was settled late last month with an agreement that gives the Yens until September 2024 to settle the debt, court records show. Still, the separate Cook County case involving the $20 million loan against only the Evanston property was filed in recent weeks and remains unresolved. Neither Su-Mei Yen, the attorneys that have represented her nor attorneys for the lenders that have filed the foreclosure complaints against her properties responded to requests for comment.
Hotels in the Chicago metro area are on the road to pandemic recovery, according to a midyear hospitality report from Marcus & Millichap. The occupancy rate hit 59.5 percent in the first six months of 2022. Occupancy neared an annual average of 55 percent going into June 2022, helped by the reopening of leisure activities and dissipating of restrictions. The brokerage predicted a positive outlook, projecting that people returning to international travel would help increase the average annual occupancy rate to 59.5 percent.
The recovery may not be happening fast enough to dig borrowers out of their holes, though. Average occupancy rates for Chicago-area hotels were at about 70 percent in 2018 and 2019 before they dropped below 50 percent in 2020, according to the Marcus & Millichap report.
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