The course correction in hotel real estate is clearer than ever. OTO Development agreed to sell the Chicago Hyatt Place, its 206-room hotel at 26 North Franklin, to Summit Hotel Properties for $74M.
Summit's purchase price shakes out to $358k/room, with an 8% cap rate based on the Hyatt Place's 2017 NOI, according to Crain's.
Coupled with the $87M sale of the Hotel Allegro last week, this is another sign of a sluggish downtown hotel market. A combination of fewer conventions and more inventory resulted in lower occupancies and RevPAR this year. Investor caution, meanwhile, has contributed to hotels selling for less than their valuations at the time they hit the market.
Still, Summit CEO Dan Hansen believes in the long-term performance of the hotel. So do analysts who feel that a busier convention schedule next year will reverse fortunes. [Crain's]
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