The building was operated as an apartment hotel and was nearly vacant, says John Rutledge, CEO of Oxford Capital. The partnership plans to redevelop the building into an "upper mid-scale boutique hotel" and expects to spend more than $24 million on the redevelopment, Rutledge tells GlobeSt.com. "We expect to spend more on the redevelopment than we spent on the acquisition," he says. Financing for the acquisition was provided by Anglo-American Bank. Jerry Cedicci, president of BAC, was unavailable for comment.
The 12-story building, with about 90,000 sf, was constructed in 1926 and was designed by architecture firm Levy and Klein, Rutledge says. The hotel is located in River North near the Magnificent Mile shopping district and south Gold Coast neighborhood. "We think it is a low-hanging fruit in this burgeoning area," he says. "The area around it is booming in all directions."
The redevelopment of the hotel will include the "gutting" of the building to the walls and floors, Rutledge says. The hotel will be closed during the redevelopment. Demolition is expected to begin Feb. 1. New mechanical systems, including electrical and elevators, will be installed in the building, he says. The hotel is expected to reopen in the spring of 2009.
It has not been decided yet whether the hotel will be an independent hotel or affiliated with a brand, Rutledge says. There are several independent options but there has also been interest from hotel brands, he says. While it would not be impossible to operate the building as a hotel without redeveloping the building, it would be a low-end hotel, almost like a hostel, Rutledge says. The partnership decided to redevelop as opposed to demolish the building. "Economically, it was not viable to tear it down and, then, go from scratch," he says.
The partnership also acquired Hotel Cass, at 640 N. Wabash Ave., in April 2006 and redeveloped the hotel into a co-brand with Holiday Inn Express. The hotel reopened at the end of last year, Rutledge says.
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