After loading up on debt near the top of the market, the owner of the landmark Allerton Hotel is all tapped out at the bottom.
A joint venture led by San Francisco-based Chartres Lodging Group LLC has defaulted on $70 million in loans on the 443-room hotel, according to a foreclosure suit filed at the end of April.
Known for its Tip Top Tap lounge — now a ballroom — the 86-year-old tower at 701 N. Michigan Ave. is now grabbing the attention of vulture investors trying to capitalize on its misfortune, caused by heavy borrowing and a severe slump in the downtown hotel market. The Allerton is the largest and latest downtown hotel to run into loan trouble in the recession, but it won’t be the last.
“There’s a lot more to come. Stay tuned,” says David Neff, a partner at Chicago-based law firm Perkins Coie LLP who represents lenders in several recent foreclosure suits against hotels, but not the Allerton.
A Chartres executive declines to comment, and an executive at New York hedge fund Perry Capital LLC, Chartres’ equity partner, did not return phone calls.
Hotel experts say Chartres’ and Perry’s equity in the Allerton is almost certainly wiped out. The joint venture paid $84 million for the Allerton in late 2006 and spent another $10 million renovating the 25-story building. The hotel was appraised at just $60 million in December, according to a loan report by Bloomberg L.P. Full article from Chicago Business…
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Allerton Hotel becomes latest, and largest, foreclosure
After loading up on debt near the top of the market, the owner of the landmark Allerton Hotel is all tapped out at the bottom.
A joint venture led by San Francisco-based Chartres Lodging Group LLC has defaulted on $70 million in loans on the 443-room hotel, according to a foreclosure suit filed at the end of April.
Known for its Tip Top Tap lounge — now a ballroom — the 86-year-old tower at 701 N. Michigan Ave. is now grabbing the attention of vulture investors trying to capitalize on its misfortune, caused by heavy borrowing and a severe slump in the downtown hotel market. The Allerton is the largest and latest downtown hotel to run into loan trouble in the recession, but it won’t be the last.
“There’s a lot more to come. Stay tuned,” says David Neff, a partner at Chicago-based law firm Perkins Coie LLP who represents lenders in several recent foreclosure suits against hotels, but not the Allerton.
A Chartres executive declines to comment, and an executive at New York hedge fund Perry Capital LLC, Chartres’ equity partner, did not return phone calls.
Hotel experts say Chartres’ and Perry’s equity in the Allerton is almost certainly wiped out. The joint venture paid $84 million for the Allerton in late 2006 and spent another $10 million renovating the 25-story building. The hotel was appraised at just $60 million in December, according to a loan report by Bloomberg L.P. Full article from Chicago Business…