Chicago’s St. Regis hotel sold for about $134 million, The Real Deal has learned, making it the city’s biggest hotel sale in years.
The buyer, a joint venture of Miami-based Gencom and Denver-based GD Holdings, came close to setting a Chicago record for the price per room it paid for the 192-key asset at about $700,000, a person familiar with the transaction said.
The firms finalized their acquisition from seller and developer Magellan Development Group as the St. Regis Chicago hotel opened this week following multiple delays. Occupying the first 11 floors of the wave-shaped towers at 363 East Wacker Drive that contain the city’s priciest condos, the hotel is one of few luxury hotels to open in downtown Chicago in the last decade.
The sale has not yet been documented in public records, and both buyer and seller declined to comment on the sale price.
The hotel inside the 101-story tower is branded by St. Regis, a luxury label owned and managed by Marriott International. It was constructed by Chicago-based Magellan, which will retain an ownership interest.
The buyers acquired the property with a $76 million loan from Varde Partners in a deal arranged by JLL, with no mezzanine debt, Gencom chief investment officer Alessandro Colantonio told The Real Deal.
The sale comes as Chicago’s hospitality market recovers from the pandemic. Among the top 25 U.S. markets, the Windy City saw the highest year-over-year increases in occupancy, which increased to almost 68 percent from about 15 percent, and in revenue per available room, which climbed to almost $117, an increase of more than 26 percent, according to STR data through May 6 as reported by CoStar.
Yet luxury hotel sales have been few and far between, and only several assets have come close to the St. Regis’ sale price on a per-room basis. Oxford Capital Group and Angelo Gordon sold the 452-room hotel at the LondonHouse at 360 North Michigan for $315 million in 2016, netting almost $697,000 per room, a record at the time.
In 2019, that mark was surpassed when two Chicago hotels, the InterContinental Chicago Magnificent Mile and the Fairmont Chicago, sold as part of a $5.8 billion portfolio deal to South Korea’s Mirae Asset Management Co. That deal allocated $559 million to the InterContinental, or about $706,000 per room, while the Fairmont moved for $489 million, or $711,000 per room, prices thought to still be slightly higher than what the St. Regis buyers paid on a per-key basis, a person familiar with the market said.
Still, the St. Regis plans to deliver an even higher level of luxury than has been offered in Chicago, as indicated by its starting room rates of more than $700 per night, the highest in the city. Colantonio said in an interview that the St. Regis’ uniqueness was a selling point. The last time a luxury hotel somewhat comparable to the St. Regis opened in Chicago was when Oxford debuted The Langham within 330 North Wabash Avenue in 2013.
“I think for us we looked at this opportunity as really a generational-type luxury asset that in a market like Chicago, that has high barriers to entry, especially in the luxury segment, you don’t see these come to pass too often,” he said.
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