Ardent is testing how investors feel about the recovery of suburban full-service hotels from the COVID-19 pandemic. The COVID-19 pandemic initially crushed demand, driving down hotel property values significantly and making it difficult for many owners to refinance their mortgages. The bad debt at the Hilton Chicago Northbrook is framed as an opportunity for the buyer to take over the hotel from a venture led by Frank His Al Gower, according to the property, but the buyer could also negotiate a new loan deal with the owner. . Alert.
The sale of loans marks one of the largest deals involving hotels in the troubled Chicago area since the start of the pandemic. Local hotel occupancy rates have been pushed to near pre-pandemic levels, but hotels still face significant challenges from Cook County’s rising property taxes and business travel returning at a glacial pace.
The loan offering also adds a new chapter to Algouer’s eventful past five years in the hotel. The owned venture was hit with a $23 million foreclosure lawsuit in 2017 for failing to make required loan payments, according to the complaint. The hotel wasn’t generating enough cash flow to cover its debt payments and was valued at just $16.9 million last year, well below what Allgauer’s venture owes.
However, Allgauer resolved the issue by securing a $3.3 million loan from Ardent in July 2017, with Ardent also acquiring senior debt and Allgauer proceeding with renovations to improve property performance. I made a contract with Allgauer not to foreclose on the property for the time being.
Allgauer completed the first phase of its multimillion-dollar renovation in mid-2019, but a second phase, scheduled for 2020, was planned for Hilton’s 19,000-square-foot event and Problems arose as large gatherings in places like conference spaces were restricted.
According to state health officials, in late 2020 the hotel hosted a large (and mostly maskless) wedding in violation of the state’s COVID-19 restrictions. He was publicly denounced by Governor Pritzker. At the time, the hotel issued a statement of apology.
The mortgage matured in January and has an outstanding balance of $34 million, including principal, accrued interest and default interest, according to Real Estate Alert.
A spokeswoman for the hotel did not immediately provide comment, and a spokeswoman for Ardent did not respond to a request for comment.
Frank Allgauer inherited the fortune from his father who opened a restaurant and banquet facility on the riverfront called Allgauer’s in 1974. Allgours opened the Allgours Hotel on the site in 1984, expanding in 1988 and later transforming it into the Hilton.
Allgauer has had trouble with hotels before. Allgauer’s venture lost his 309-room Hilton in Lyle in 2016 after a lender filed a foreclosure lawsuit against him for $37 million.