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In spite of the tumultuous times facing downtown hotels, the owner of the Residence Inn Chicago Downtown/Loop secured $141M of new senior and mezzanine loan financing for the hotel.
The deal will allow the 381-key hotel at 11 South LaSalle St. to get past the COVID-19 crisis, which left many downtown hotels nearly empty as conventions were canceled and other business and leisure travel dried up, according to The Prime Group CEO Michael Reschke.
“This new financing was structured to give time for the hotel to fully recover over the next two years, a time period we conservatively estimate may be required before the pandemic is eradicated and the hospitality industry fully recovers,” he said in a statement. “However, we remain confident that with the wide dissemination of two vaccines, the hospitality market will begin a more rapid recovery by this summer and achieve near full recovery in 12 to 15 months.”
Hotel occupancy in Chicago’s Central Business District from January 2020 to November was 29.4%, according to data from STR, a Tennessee-based company. Over the same period in 2019, occupancy was 74%. The average daily rate for an occupied room declined from $204 to $132, and revenue per available room plummeted from $151 to $39, a nearly 75% decline.
Reschke opened the hotel in 2015 after completing an adaptive reuse of the 38-story Roanoke Building & Tower, a landmark tower designed by Holabird & Roche and completed in 1925.
The financing allowed the owner to repay the loan and equity financing used to acquire and redevelop the building. It also helped build up a reserve of working capital, pay fees and transaction costs, and handle other expenses.
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