German investor paying $110 million for Loop’s Hyatt Centric hotel
A German investment manager has a contract to buy the Hyatt Centric hotel in the Loop for $110 million, in a deal that will generate one of the highest prices-per-room ever paid in downtown Chicago. (Murphy Development Group)
A German investor has a contract to buy the Hyatt Centric hotel in the Loop for $110 million, in a deal that will translate into one of the highest prices-per-room ever paid in downtown Chicago.
Deka Immobilien, the real estate arm of DekaBank Group, plans to buy the 257-room hotel as part of a "multidecade" sale-leaseback deal with the property’s developer, an affiliate of Murphy Development Group, developer John Murphy confirmed.
Murphy, the Chicago development firm’s president, declined to comment on the price or how long his company will lease back and operate the hotel. DekaBank representatives did not immediately respond to a request for comment.
DekaBank’s price for the 257-room hotel at Monroe and Clark streets equals about $428,000 per room, or $110 million, according to sources.
Frankfurt-based DekaBank, part of Germany’s system of public savings banks, has several real estate funds. The Chicago deal is for a fund focused on U.S. properties.
The sale, brokered by Jaime Fink and Jeff Bramson of HFF, appears to nearly double Murphy Development’s costs for the hotel project. Murphy bought the 22-story building for $12.8 million in 2012, and in 2013 took out a $45 million construction loan to redevelop the building, according to Cook County property records.
The hotel opened in April 2015, kicking off a new brand that Chicago-based Hyatt Hotels rolled out in several cities that year. French restaurant Cochon Volant is on the hotel’s ground floor.
DekaBank’s deal is similar to the record $315 million sale of the 452-room LondonHouse hotel at North Michigan Avenue and Wacker Drive to another German investment manager last year. In that transaction, Hamburg-based Union Investment Real Estate paid a Chicago-record $697,000 per room. In turn, an affiliate of Chicago-based Oxford Capital Group agreed to pay rent and continue operating the hotel for 25 years.
The Hyatt Centric and LondonHouse hotels were part of a wave of downtown office buildings converted to hotels in recent years. Murphy’s firm also converted the office portion of the Oriental Theatre building into the recently opened Cambria Hotel & Suites and turned the Chicago Motor Club Building into a Hampton Inn.
Conversions and ground-up developments of new hotels have brought concerns of an oversupply of Chicago hotel rooms. But the sale-leaseback deals allow the buyers to lock in relatively safe long-term returns regardless of what happens to future demand for downtown hotel rooms.