Canyon targets Chicago hospitality in all-cash deal

The firm has bought Hotel 71 on Chicago’s Wacker Drive for an undisclosed sum out of CMBS special servicing.

Canyon Capital Realty Advisors has acquired a 437-room hotel in the heart of Chicago after the securitised loan secured against the property went into special servicing.

The Los Angeles-based firm declined to disclose the value of the all-cash deal, but said Hotel 71, on Wacker Drive, was acquired through a real estate mortgage investment conduit (REMIC), the special purpose vehicle used for pooling mortgage loans. The hotel had been security for a senior loan included in the CMBS pool, and was foreclosed on by lenders last July.

According to real estate data provider Real Capital Analytics, the hotel had a first mortgage of $61.3 million secured against it, which had been securitised by lender Wachovia in January 2005. RCA estimated there was an outstanding mortgage of around $83 million, with Oaktree Capital financing a $27 million mezzanine loan.

Canyon Capital had financed a bridge loan for the property, RCA added, with Chicago-based Falor Co. buying the property in 2005 for around $95 million.

In a statement today, Canyon said the deal was agreed with the special servicer of the CMBS REMIC after gaining approval “from the controlling note holder of the former senior loan and the [real estate-owned] asset”.

The firm said it would reposition the hotel, adding that Chicago was “one of the most strategic hospitality markets in the country”.