A group of Chicago hoteliers is at risk of losing their hotel near the O’Hare International Airport in foreclosure.
It wouldn’t be the first recent real estate play to go sideways for Bimal Doshi and Paul Busching, two of the six people named as the managers of the company that owns the 295-room Four Points by Sheraton at 10249 West Irving Park Road in the suburb of Schiller Park.
The property owner, Schiller Park Hospitality LLC — whose managers include Amin Amdani, Waqas Akuly, Satya Mehta and Fouzan Memon along with Doshi and Busching — is being sued by loan servicer Rialto Capital Advisors, which is acting on behalf of the bondholders in a $11.5 million commercial mortgage-backed securities loan issued against the property in 2013.
Rialto Capital Advisors is seeking to foreclose on the mortgage, alleging in the complaint filed this month in Illinois federal court that Schiller Park defaulted on the debt by failing to pay Sheraton franchise fees, management fees associated with the loan and accelerated debt within a five-day notice. The suit adds that the failure to pay the fees means the entire unpaid debt plus fees and interest — more than $9 million altogether — is due back to the borrower immediately rather than as scheduled by the loan’s original November 2023 maturity.
The managers of the Schiller Park LLC and a law firm associated with it didn’t return requests for comment. The real estate firm, Opine Properties, which shares an address with the LLC and lists Amdani as a manager also didn’t return a request for comment, nor did attorneys representing Rialto.
The Schiller Park property was appraised at $19.3 million in March, up from $17 million when the loan was issued in 2013, according to ratings agency DBRS Morningstar. It’s not in its troubles since the onset of the pandemic. Multiple Chicago-area hotels are in the midst of foreclosure suits and auction sales, and assets that have sold in standard deals endured losses of value, including two downtown Chicago properties sold for a combined $130 million by California-based Sunstone earlier this year. Another suburban asset, a 254-key Marriott in Downers Grove, was sold by publicly traded REIT Host Hotels for $14.5 million this fall, less than half the firm’s appraisal of the asset published in its annual report last year.
Doshi and Busching, principals at Schaumburg-based Prominence Hospitality Group, are among those to have suffered a recent loss in a hospitality market that has barely begun its recovery.
In June, Prominence sold a 206-room Hyatt hotel in Rosemont for $4.4 million, a loss from the $11 million it bought the property for in 2017, according to public records and published reports. Prominence did not return a request for comment on the foreclosure lawsuit. Doshi and Busching are also managers at BASK Development Inc., which is based at the same address as Prominence. BASK also sold a three-hotel, 262-room portfolio in Chicago’s collar counties for $19.2 million total in deals that marked losses in value for some of the assets over the summer.
While hotels in the Chicago-area are on the road to recovery, it may not be rapid enough to dig borrowers out of their holes. The area’s occupancy rate neared 60 percent in the first six months of 2022, according to a report from Marcus & Millichap. This is down from about 70 percent in 2018 and 2019 before they dropped below 50 percent when the pandemic hit in 2020.
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