I promised to follow up here when there is more news about Hotel 71, and some moved this morning at Crain's.
The word is that Wachovia, the special servicer for the CMBS pool that took title to the property after winning a bankruptcy auction, has hired an Atlanta-based broker to seek buyers. Tough market, but, as the story notes, this will be an interesting test of the waters.
Also according to the story:
Hotel Monaco has 192 guest rooms, or so says Google. So Cornerstone paid roughly $415,000 a key. If the hotel sells for $60 and you have to do a $20 million PIP, you are all in at $80,000,000. Interesting symmetry. The difference is that Hotel 71 has 437 rooms, so your all in cost would be roughly $183k per key. Now, there are certainly differences between the hotels, and the Kimpton-flagged Monaco has some cache to it these days. But it is the same area.
Complicating the transaction further, a buyer would need to spend about $20 million to finish a renovation..... One person familiar with the hotel expected it to sell for no more than $60 million, down from [the] $92.1 million...paid for it in March 2005.
In one of the few large downtown hotel sales of the year, Cornerstone Real Estate Advisors LLC paid nearly $80 million for the Hotel Monaco at 225 N. Wabash Ave., a block away from Hotel 71.
The business question is whether the price works in this market and with new hotels on line in that neighborhood such as Trump's and the continuing hope that Shangri-La will eventually be there. The Inter-Continental sold in 2005 for an estimated $210k/key and the Westin on North Michigan at $180k/key. Take a look at numbers and prices in this press release from April and decide for yourself. After all, I don't make the deals, I just help get them done. And this ought to be an interesting one when all's said and done.