CHICAGO, IL – The Prime Group, Inc. ("Prime") announced has closed on $393.6 million of construction financing and joint venture equity for the renovation of 208 South LaSalle,(photo above) a historic landmark in downtown Chicago. The renovation project includes the construction of a new five-star, luxury JW Marriott Hotel in the lower twelve floors of the historic building.
208 South LaSalle is one of Chicago’s most treasured architectural assets, being the last and most significant building that Daniel Burnham designed before his death in 1912. The building has been designated as a historic landmark by the city, state, and federal landmark commissions, and has been added to the National Register of Historic Places. (Photo at right shows The Rookery #1; 208 LaSalle #2; Federal Reserve Bank #3; Chicago Board of Trade #4; LaSalle Street Canyon #5. File photo by Nathan Kirkman)
The "JW Marriott Hotel-Chicago" will include 610 rooms and suites, 48,000 square feet of ballroom and conference meeting space, and a 20,000 square foot "world class" spa and health club. The JW Marriott Hotel will be operated and managed by Marriott International and is scheduled to open in early 2010. The renovation of the project’s office component will be completed in early 2009.
Located in the heart of Chicago’s Central Business District, the 21-story building was previously leased as a multi-tenant office building. Prime acquired the property in late 2005, and has since committed to returning the building to its original splendor through an adaptive re-use of the architectural landmark.
At a total cost of $393.6 million, the redevelopment project will include converting the lower twelve floors into a five-star, luxury JW Marriott Hotel, (artist file photo at right below) as well as upgrading the 335,000 rentable square feet of office space that will remain on the top nine floors and the 18,000 rentable square feet of ground floor retail space.
The "JW Marriott Hotel-Chicago" will include 610 rooms and suites, 48,000 square feet of ballroom and conference meeting space, and a 20,000 square foot "world class" spa and health club. The JW Marriott Hotel will be operated and managed by Marriott International and is scheduled to open in early 2010. The renovation of the project’s office component will be completed in early 2009.The project is being developed by UST Prime III Joint Venture, Ltd. (the "Venture"), a joint venture between Reschke Chicago Partners, LLC, an affiliate of Prime, and an affiliate of Estein & Associates USA, Ltd. ("Estein"). With its US office based in Orlando, Florida, Estein is one of the largest German investors in US real estate with over $3.0 billion of equity investment since 1978. Estein and Prime have had several successful development joint ventures over the last twelve years.
Construction financing for 208 South LaSalle, in an aggregate amount of $271.6 million, came from three different lenders – Union Labor Life Insurance Company (ULLICO), Private Bancorp, Inc. and Capri Capital Partners, LLC. ULLICO provided a $209.1 million first mortgage construction loan for the hotel portion of the project.
Capri Capital Partners, LLC, a long time partner of The Prime Group, provided a $12.5 million second mortgage for the hotel. Private Bancorp, Inc. provided a $50.0 million first mortgage for the office portion of the project. Estein and Prime capitalized the Venture with $123.0 million of equity capital.
The Chicago o
ffice of Holiday Fenoglio & Fowler, LLC advised and assisted the Venture in securing the construction financing. The HFF team was led by senior managing director Mike Kavanau (photo at left) and director Matthew Schoenfeldt. "Given the strength of the location and general dearth of luxury hotels in the loop, HFF was able to attract several competitive lenders to the project," said Schoenfeldt. "Sponsorship and Marriott Corporation were both outstanding to work with; in this environment having flexible and well capitalized partners was the absolute key," Kavanau said.
ffice of Holiday Fenoglio & Fowler, LLC advised and assisted the Venture in securing the construction financing. The HFF team was led by senior managing director Mike Kavanau (photo at left) and director Matthew Schoenfeldt. "Given the strength of the location and general dearth of luxury hotels in the loop, HFF was able to attract several competitive lenders to the project," said Schoenfeldt. "Sponsorship and Marriott Corporation were both outstanding to work with; in this environment having flexible and well capitalized partners was the absolute key," Kavanau said."We are thrilled by the opportunity to create a new landmark in downtown Chicago through the adaptive re-use of one of Daniel Burnham’s architectural masterpieces," says Michael W. Reschke, Chairman and CEO of The Prime Group, Inc. "Our ability to attract significant debt and equity capital for a new luxury hotel in downtown Chicago is a clear indication of the continued strength and vitality of the Chicago luxury hotel market.
"The JW Marriott Hotel-Chicago will provide the finest business and leisure accommodations in downtown Chicago. In addition, the 48,000 square feet of ballroom and conference meeting space, along with the 20,000 square foot world-class spa, will provide an exceptional amenity for our hotel guests, as well as the office population surrounding the hotel in downtown Chicago."
The closing of this deal further strengthens Prime’s position as one of the preeminent development companies in the country. Prime has been widely recognized as the developer and/or owner of award winning, architecturally-significant and technologically advanced real estate properties.
Over the past 25 years, Prime has successfully developed over $11.0 billion of institutional-quality commercial and residential real estate across all product types. In recent years, Prime has focused its development activities primarily in downtown Chicago.
In Chicago, Prime also is developing a 35-story luxury condominium tower at 10 East Delaware, a 55-story Class A plus office tower on the west bank of the Chicago River at 400 West Randolph, and a 350,000 square foot retail lifestyle center at 39th & State. In addition, Prime is renovating another historic landmark office building, the Roanoke Building and Tower, located at 11 South LaSalle in downtown Chicago.
For further information on Prime, please contact Larry Vogler, President, at (312) 917-7178.
For further information on Estein, please contact Lance Fair, Vice President, at (407) 909-2220.
MEDIA CONTACT:
Laurie Fish McDowell
Associate Director HFF
Laurie Fish McDowell
Associate Director HFF
One Post Office Square, Suite 3500
Boston, MA 02109
tel 617.338.0990
tel 617.338.0990
fax 617.338.2150
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