Lance Fair, COO of Estein USA and JW Marriott Chicago (Photo credit: Estein; Google Maps)

The financial stress that the coronavirus has imposed Chicago downtown hotels, whose occupancy rate hovers around 13%, has reached a critical point for many.

And luxury hotels are not immune.

Now a senior portion of $ 40 million of JW Marriott Chicago’s A $ 203 million mortgage has been transferred to a special department and is in danger of default, according to Crain’s, citing a Bloomberg report.

The debt of the 610 key hotel located at 151 W. Adams St. is part of a CMBS loan, and the special service transfer may also indicate that the terms of the mortgage need to be restructured to avoid default. .

According to the report, the owner of the hotel – a unit of Florida-based real estate company Estein USA – was behind on debt service payments in May. The company now claims it made this payment. The loan was transferred to Rialto Capital Management for a special service, the report notes.

Illinois is one of the last states to remain essentially on lockdown amid the pandemic, and in Chicago, overall hotel occupancy rates were 24%, according to the latest figures from hotel research firm STR.

The desperation in Estein COO Lance Fair’s words was evident when discussing the situation. “We need the mayor to reopen the city and reopen it for business,” Fair said, according to Crain’s.

Nationally, hotel occupancy rates in the United States have plummeted – although they are slowly increasing as states reopen in stages – and the market for commercial mortgage-backed securities has grown. is seized with the flu. Billions of hotel loans have been sent to special maintenance.

Locally, Thor Equities ignored its April loan payment on the $ 427 million refinance it contracted on the 1,600-key Palmer House Hilton. Thor bought the Palmer House for $ 230 million in 2005, and completed a $ 131 million renovation in 2008. The CMBS loan was transferred to a special department when Thor failed to pay his fees. Million dollar debt service. [Crain’s] – Alexi Friedman

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