Goldman Sachs, Phoenix Development take big losses on Deerfield hotels

Two investors took sizable losses on brand-name hotels in a northern suburb of Chicago this month.

A Goldman Sachs venture got $6.6 million for the 248-room Chicago Marriott Suites Deerfield, an asset it paid $30 million for a decade ago, public records show. And Chicago-based Phoenix Development Partners sold the 301-room Hyatt Regency Deerfield for $21.5 million, after buying it for $31.5 million in 2018 and putting $14 million into renovations.

The lower sale prices appear to reflect the hospitality market’s slow recovery from pandemic’s blow to tourism and business travel, and how acutely it may be felt by suburban hoteliers with assets next to corporate campuses like Deerfield’s, which some developers have suggested would be better off as warehouses.

A spokesperson for Goldman Sachs declined to comment. Phoenix Development Partners did not respond to requests for comment.

The buyer of the Chicago Marriott Suites Deerfield property at 2 Parkway North, Mark Beffort, has bet on distressed assets in the area before.

An LLC managed by the Oklahoma-based real estate investor was the buyer of two large Chicago-area hotels, the 269-room Hilton Orrington in downtown Evanston for $34 million and the 408-room Westin Chicago Northwest in Itasca for $30 million from a court-appointed receiver in 2022, according to previously published reports and public records. Beffort did not respond to requests for comment.

A venture tied to Uniondale, New York-based Blue Sky Hospitality was the buyer of the other Deerfield hotel at 1750 Lake Cook Road. A Blue Sky executive didn’t immediately return a request for comment Monday.

Demand for hotel rooms in Illinois grew by about 21 percent in 2022 over the previous year, indicating improvement but still falling about 7 percent short of the 2019 level, according to a June report from Tourism Economics.

Deerfield has also become less of an office destination, with both healthcare equipment maker Baxter International and pharmacy chain Walgreens having vacated huge chunks of their corporate campuses next door to both hotels, which sit on either side of Interstate 94 near the Lake Cook Road interchange. Walgreens last year put an out-of-use, 37.5 acre portion of its commercial property to the east of the Hyatt hotel up for sale, as it only has employees heading to its office buildings north of Lake Cook Road.

Baxter is also selling its 10-building, 101-acre corporate campus, which is being minimally used next door to the Marriott property, though a deal has been hard to strike for an interested buyer, Bridge Industrial, which is proposing to transform the asset into a logistics park despite objections from local officials and residents.

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