A venture led by Beffort, who is backed by a high-net-worth family in the Oklahoma City area, paid just more than $34 million for the nine-story property at 1710 Orrington Ave. in Evanston, sources said. The purchase price of Westin could not be determined.

The deals mark the largest distressed sales of Chicago-area hotels since the pandemic began, a sign that some investors see a clear path to recovery for local inns. Occupancy at Chicago-area hotels has been near pre-pandemic levels in recent months from booming demand for leisure travel and the return of large group gatherings. Room rates now exceed what they were in 2019.

Local hotels still face major challenges with higher labor costs, rising Cook County property taxes and business travel returning at a glacial pace, but the Beffort deals show investors may continue to line up to buy properties difficult if the discount is so heavy.

The Evanston deal finalizes an Orrington consensual short sale, which means the owner — with the approval of his lender — sells the property for less than the value of the debt attached to it.

New York-based real estate firm Olshan Properties and its lender earlier this year hired the Chicago office of Jones Lang LaSalle to market the property, a move that came more than 10 months after Olshan was hit with a foreclosure suit for alleged non-payment of her $40. million loans. The loan was packaged with other mortgages and sold to commercial mortgage-backed securities investors, making most of the property’s financial data public.

When the foreclosure complaint was filed, Olshan told servicer Midland Loan Services — which is overseeing the mortgage on behalf of the CMBS bondholders — that he planned to turn over the keys to the property to settle the case. But the two agreed to try a short sale to recoup as much of the lender’s investment as possible.

The balance of the loan is just under $39 million, according to Bloomberg data related to the CMBS loan, meaning CMBS investors will get a financial cut in the sale of Beffort’s venture. The purchase price is also dramatically lower than the $60 million Olshan paid for the hotel in 2015.

The hotel performed well before the pandemic, generating net cash flow of nearly $3 million against less than $2.6 million in debt service, Bloomberg credit data show. But net cash flow plummeted during the pandemic to less than $1.3 million in the 12 months ended June 2020. Olshan stopped making loan payments in August 2020, according to the foreclosure complaint, and the property was valued at $34 million in February, Bloomberg CMBS data show.

Beffort did not respond to a request for comment. A spokesman for Olshan did not immediately provide a comment on the transaction.

A source familiar with the deal said Beffort’s venture is planning a series of capital improvements for the property, which offers almost 20,000 square feet of meeting space. That includes the 5,848-square-foot Grand Orrington Ballroom, which was severely damaged by a roof leak during the pandemic and is now in “shell condition,” according to a marketing flier from Jones Lang LaSalle, which brokered the sale to the Beffort venture. . The property also includes a 178-space, 65,000-square-foot parking garage.

In Itasca, a Beffort venture is set to buy a property that was at the center of another COVID-triggered legal battle last year between the hotel’s previous owner and its lender. Philadelphia-based GF Hotels & Resorts and lender Oceanview Commercial Mortgage Finance sparred in court last summer over how to resolve the distressed Westin hotel at 400 Park Blvd. in the suburbs.

GF and a Marriott International venture temporarily closed the property at the start of the pandemic. (Westin is a Marriott brand.) But by the time Marriott gave GF the green light to reopen to guests more than a year later, demand had collapsed so badly that GF decided it couldn’t make the mortgage payments. her $31.3 million and took steps to turn the property over to Oceanview instead of going through a foreclosure process. But Oceanview filed a foreclosure suit anyway last summer, asking a DuPage County judge to force GF and founder Kenneth Kochenour to pay a total of $33.2 million.

DuPage County records show the cases were dismissed in November. A source with knowledge of the matter said an Oceanview subsidiary subsequently took control of the property and recently marketed it for sale, eventually reaching an agreement with the Beffort venture.

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