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CHICAGO: Lending Leaves Small Hotels Behind

Older Chicago-area hotels not planning a major reno or rebranding to keep up with new construction will struggle significantly, but hotel financing options $10M-and-under are tight due to a limited number of lenders that'll consider this asset class, says Thorofare Capital SVP Felix Gutnikov (right, at ICSC RECon with CEO Kevin Miller). Hotel owners are turning to the private capital markets for one- to three-year, short-term renovation money, but it's an easier get for regional operators versus mom and pops. Thorofare just closed an $11.5M loan in one week against a 242-room Sheraton in Lisle/Naperville (formerly a Wyndham) for new owner Vinayaka Hospitality Lisle, making the property a prime CMBS target next year once it's stabilized, he says.

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