Oxford, Perry team up to acquire Chicago hotel

Hotel investment and advisory group Oxford Lodging is working with Perry Capital, a hedge fund headed up by Robert Stern, to acquire the Allerton Hotel in Chicago. The transaction was reportedly valued at $70 million (€55 million). A subsidiary of FelCor Lodging Trust, a hotel REIT, is the seller.

“We were attracted by this opportunity because of the increasing depth of Chicago’s hotel demand, the Allerton’s longstanding place within Chicago’s history and its prime location on Michigan Avenue,” Stern said in a statement. “Chicago remains a strong business, convention and leisure destination.”

Chicago remains a strong business, convention and leisure destination. Robert Stern, Perry Capital

The 443-room hotel, called the Allerton Crowne Plaza Chicago, was built in 1922 and is said to have spurred the transformation of North Michigan Avenue area into the Magnificent Mile, an area marked by its shops, restaurants and clubs.

The Allerton was also home of a penthouse bar called the Tip Top Tap, still advertised on the neon sign atop the hotel. The famed penthouse lounge closed in the 1960s.

Under the new owners, the hotel will undergo a $10-million renovation, which will include moving the hotel’s lobby back to the second floor. There was no word on whether the Tip Top Tap will be reopened.

Perry Real Estate Partners, the property arm of Stern’s Perry Capital, has been in the market raising $150 million for its debut private equity real estate fund and is headed up by former Blackacre pro Andrew Isikoff.

Oxford currently manages a portfolio of more than 13,000 rooms in the US and Japan. Earlier this year, Oxford acquired the nearby Best Western Inn of Chicago, built in 1928. The firm is currently renovating that hotel.

Irving, Texas-based FelCor is reportedly selling off assets that do not fit into its all-suite hotel portfolio.