Re-sale possible of Chicago hotels part of $5.2 billion deal
Loop North News

Hotels & Restaurants

(Above) Lobby of Hotel Chicago, one of two Chicago hotels sold to Pebblebrook Hotel Trust.

1-Oct-18 – Inspected in person by new owners, two River North hotels sold in a $5.2 billion deal last month could be sold again over the next year.

Pebblebrook Hotel Trust has announced the sale of just three of the 41 hotels it acquired from LaSalle Hotel Properties – two in New York and one in San Francisco – but says more will be sold to reduce debt.

Jon Bortz, chairman, president, and chief executive officer of Pebblebrook, told investors on September 13 that within six months to a year after closing on the LaSalle deal, the company will sell an additional $500 million to $1 billion in assets. He did not identify which hotels would be sold.

The Westin Michigan Avenue, Hotel Chicago, and much of the commercial property at Marina City were sold to Pebblebrook in a deal announced on September 6.

In Chicago on September 20, Pebblebrook’s executive vice president and chief financial officer said they have not yet decided what to do with the Chicago properties but will review them.

Raymond Martz

“We haven’t made a determination either way of any of these assets,” said Raymond Martz (left). “We’re going to evaluate each of them. None are on the block, but none are off the block.”

LaSalle Hotel Properties had owned Hotel Chicago and adjacent commercial property since 2006, when it purchased what was then the House of Blues Hotel from HOB Entertainment Inc. for $114.5 million. The property now includes commercial spaces leased by 16 businesses.

Many of the hotels Bortz is visiting, that were acquired in the merger, will be familiar to him. From 1998 to 2009, he was president, chief executive officer, and a trustee of LaSalle.

Though Chicago is “a very popular market,” Martz says it struggles with over-supply of hotel rooms. He says it “clearly impacts the market and it makes it difficult to drive room rates.”

(Right) The Westin Michigan Avenue, looking north from Michigan Avenue. (Click on image to view larger version.)

Marriott International, Inc.

Under terms of the merger agreement, LaSalle shareholders will choose between $37.80 for each share of LaSalle stock they own, or trade for 0.92 shares of Pebblebrook stock. The deal is estimated to be worth $5.6 billion, with Pebblebrook buying all of LaSalle’s outstanding common shares. It is $800 million more than an offer LaSalle had from the private equity firm Blackstone Group LP.

With 66 assets in or near 16 key urban markets, Pebblebrook says it will be the largest owner of independent hotels.

The transaction is subject to approval by shareholders of LaSalle and Pebblebrook, regulatory approval, and closing conditions, but is expected to close by the end of 2018.

 Previous story: $5.2 billion deal includes Marina City commercial property

By Steven Dahlman | Loop North News |

Published 1-Oct-18 1:59 PM

Loop North News


What’s news in the Loop and Near North neighborhoods of downtown Chicago.

Signup for our weekly email. No ads and no charge. Just enter your email address here...

Number of subscribers:
See this week’s update

More stories

City Club of Chicago presents Kwame Raoul, candidate for Attorney General. Raoul started his legal career nearly 25 years ago as a prosecutor in the Cook County State’s Attorney’s Office, handling child welfare cases, prosecuting violent criminals, and helping crime victims access resources and exercise their rights. He currently serves as a partner in the health law group of Quarles & Brady. 7:30 a.m. reception, 8:00 a.m. breakfast. Maggiano’s Banquets, 111 West Grand Avenue. Cost: $50. Map. More info.

Join over 200 people on the Chicago Riverwalk, as they grab their fishing poles to take part in the second Chicago Fishes event. Celebrate recent improvements to the river and learn more about the fish that call it home. No charge to attend and all fishers will be covered by a group permit. A limited number of poles and free bait will be provided. 3:00-6:00 p.m., west end of Chicago Riverwalk between Lake and Orleans Streets. Map. More info.
More events

Biggest Gainers & Losers

359.35 6.15

177.51 5.34

104.66 3.34

117.41 3.21

Downtown Chicago Stocks