The ruling is a step toward the final sale of the 1,635-room property at 17 E. Monroe Street, which could be a fraction of its pre-pandemic value. The hotel was valued at his $328 million in March, which is far less than the value Toll owes on the property, and his 2018 investment when Toll took out a mortgage. It’s a far cry from its $560 million valuation. Wells Fargo is the trustee overseeing the $333.2 million senior loan.
Thor also has a $94 million mezzanine loan tied to Palmer House that was separately packaged and sold to investors in CMBS. Based on the property’s valuation, investors in that mezzanine loan could wipe out their stock entirely once the foreclosure sale completes as expected.
The property is likely to proceed to a sheriff’s foreclosure sale, where Wells Fargo could bid and ultimately obtain court approval to take ownership of the property. The lender can then sell the hotel for free and clear the court system. A Bloomberg report related to the CMBS loan said Wells Fargo expects the sale to be approved and close in August.
Toll has fought back against a hotel foreclosure lawsuit and argued in response to complaints that the COVID-19 pandemic restrictions have made it impossible to comply with a mortgage. The company also claimed that the pandemic prevented it from using the mortgage for its original purpose of running the hotel.
But Robles denied those allegations, saying there was no government order to force the hotel to close, the pandemic was not an “unforeseen event” and Toll could have been able to continue paying his mortgage. I decided that
A spokeswoman for Toll declined to comment on the ruling.
Lenders may be in a position to sell properties as downtown hotel performance improves, albeit slowly. A recovery in leisure travel demand in recent months and an increase in conventions and group events pushed downtown hotel occupancy to its highest level since late 2019, according to his STR, a hospitality data and analytics firm. did. However, large full-service hotels like the Palmer House rely heavily on group regrouping and have recovered more slowly than limited-service hotels.
The Palmer House foreclosure ruling follows another ruling at the 610-room JW Marriott Chicago in the Loop. Wells Fargo is also the trustee for his CMBS loan tied to the property, and at a July 8 foreclosure auction he submitted a high bid of $251 million, according to the Chicago Tribune. , acquired the right to manage the property.
Thor is also facing pending foreclosure lawsuits related to the retail portion of the Palmer House property, which includes a 60,000 square foot storefront and parking lot. In December 2020, trustees representing investors in her $62 million CMBS loan tied to the retail facility filed a foreclosure complaint, according to Cook County court records. Bloomberg loan data shows him valued at $39.9 million in July 2021, down from $92.6 million when the loan began in 2015.
Toll was already making significant profits at Palmer House before the pandemic. The company paid him $230 million for hotels in 2005, and in 2008 he spent $131 million on renovations. After that, Toll said that in 2014 he refinanced the property with a $420 million loan, previously he had paid off the $365 million loan, and he probably pocketed the $55 million difference. I put it in
The 2018 mortgages, including the mezzanine loans, allowed us to liquidate an additional $7 million in assets compared to our previous mortgages, adding to our annual operating income from real estate. The hotel generated $30.9 million in net operating income in 2019, down 20% from the previous year, according to Bloomberg loan data.
Toll made two attempts to sell the hotel during its tenure of ownership, most recently seeking about $575 million in a 2015 offering, but eventually held on to it. .
While working on Palmer House, Toll has focused its development efforts on the trendy Fulton Market District. The company developed a new headquarters for snack maker Mondelez International at 905 W. Fulton Market and sold its Chicago office to German investors in 2020 for a record high per square foot of his building. . Thor opened his 450,000-square-foot office building at 800 W. Fulton St. last year. The office building is supported by Aspen Dental, a dental practice services company.