Brookfield Sells Chicago Hotel to Prakash Patel

Brookfield Asset Management is trimming some fat from its pandemic-era hospitality takeover.

The Toronto-based alternative investment giant offloaded the Homewood Suites Chicago-Downtown for $29 million, a 233-room extended-stay hotel at 40 East Grand Avenue, situated just a block off the Magnificent Mile, public records show.

But the property didn’t trade hands to another institutional behemoth. Cook County records show the buyer is an entity tied to investor Prakash Patel, operating far from the glitz of commercial real estate’s usual corporate hubs. Patel listed a residential home in Battle Creek, Michigan as his principal place of business for the transaction.

The sale closes a chapter on a property Brookfield scooped up as part of a large distress play a few years ago. The mega-landlord came into possession of the Chicago property, along with roughly 100 others, during an April 2021 bankruptcy proceeding for Hospitality Investors Trust.

At the time, Fairfax, Virginia-based Hospitality Investors was bleeding cash, battered by the pandemic’s gutting of the travel sector. Brookfield was the real estate investment trust’s largest investor after throwing it a $400 million lifeline in 2017, a stake that had grown to $441 million by the time of Hospitality Investors’ 2021 bankruptcy, according to The Real Deal’s reporting at the time. Brookfield ultimately stepped in to take control of the struggling company and its entire portfolio through a Chapter 11 restructuring, effectively taking the keys when Hospitality Investors could no longer stay afloat.

Now, Brookfield appears to be shedding at least some of that baggage. With a price of just under $125,000 per key, the seller fared better than others in recent Chicago-area hotel deals. Earlier this year, an affiliate of New York-based Fortress Investment Group took over a 525-room Westin hotel near O’Hare International Airport for just $95,000 per key, while fellow Chicago-area hotel investor Parag Patel last year paid just $122,400 per key for another extended stay property, a Home2 Suites by Hilton-branded hotel in Schaumburg.

However, another extended stay property in downtown Chicago is leaving the market for lengthy visits. Earlier this year, Chicago Alderman Brian Hopkins said New York-based Churchwick Partners is preparing to turn the 19 story, 221-room Sonesta Extended Stay Suites hotel at 201 East Walton Place into apartments.

Brookfield didn’t immediately return a request for comment on whether it has sold or plans to liquidate any other hotel properties acquired in the Hospitality Investors bankruptcy. Messages left at a phone number associated with Prakash Patel weren’t returned.

Hunter Advisors brokered the Chicago sale, with senior vice president Spencer Davidson and vice president Riana Stadlen leading the transaction. The brokers noted the property offers “meaningful value-add potential through the completion of a property improvement plan and operational enhancements.” That’s a signal the Hilton-branded hotel — which occupies floors 6 through 19 of the building and features a rooftop indoor pool — could use a cash injection and a management turnaround to compete with peers.