A Seattle-based real estate development firm bought an Embassy Suites in the northern Chicago suburbs for less than its value over a decade ago.
BCI Pacific Real Estate bought the Embassy Suites Deerfield last month for $12.5 million, or $52,700 per key, from Los Angeles-based Broadshore Capital Partners. Broadshore is a former investment management subsidiary of Los Angeles-based real estate development firm Lowe Enterprises. Lowe sold off its interest in Broadshore in 2018.
Lowe bought the 237-room hotel out of distress in 2011 for $15 million, prior to selling off its investment management subsidiary to Broadshore. The hotel underwent a “multimillion dollar renovation” that was completed in 2019, according to Hotel News Resource.
The owners took out multiple lines of credit on the 1445 Lake Cook Road property but it’s unclear exactly how much Lowe or Broadshore spent on the renovations.
Broadshore declined to comment, and BCI did not respond to a request for comment.
The property fell into tough financial shape after the Great Recession. Prior owner FelCor Lodging Trust relinquished the property to its lender in 2010. Around that time it was appraised at $11 million, falling short of FelCor’s $14 million mortgage on the property.
Its most recent property tax appraisal came in at $16 million.
Depending on the structure of the BCI’s recent deal, it’s possible Broadshore recouped some costs via closing cost credits or other incentives.
The sale reflects Chicago’s generally uneven recovery from the pandemic. The multifamily and industrial sectors have fared well since the pandemic but others, like retail and hospitality, have had less stable recoveries. Meanwhile, the office market, except among Class A buildings, is languishing amid record high vacancy rates.
While tourism and business travel has improved, some hotel properties are still struggling.
In Western suburban Lombard, a venture of Chelsea Hospitality Partners and Seaview Investors is facing a $25 million foreclosure of an Embassy Suites property at 707 East Butterfield Road.
A $25.3 million loan backed by the 262-room hotel at 707 East Butterfield Road in Lombard is in default after the borrower failed to pay it off ahead of a May 22 maturity, according to Morningstar Credit. Phoenix-based Western Alliance Bank originated the loan in 2019 and it was later sold off to commercial mortgage-backed securities investors, making details of its performance public.
A July loan report stated that the “borrower has no plans to refinance,” and added that the lender’s counsel is preparing to send the landlord a default notice as well as a pre-negotiation agreement. The agreement could provide an opportunity for a workout plan for the debt if they end up interested in keeping the asset.