Lenders have taken ownership of the Westin Chicago North Shore Hotel in Wheeling that is engulfed in foreclosure proceedings, said John Weiss, a partner with Chicago law firm Duane Morris LLP representing the lenders’ agent.
With no other bidders for the property, the lenders on Thursday made a $63 million credit bid for the upscale 412-room hotel at a court-ordered auction, Weiss said.
However, the court proceedings have no bearing on the operation of the hotel, which is still managed by Westin.
“These procedures almost never have any impact on the property itself,” Weiss said. “It is completely invisible to anybody that stays at the hotel.”
The 5-year-old hotel at 601 N. Milwaukee Ave. was built in 2006 by Oak Brook-based Harp Group Inc., although Harp cashed out of most of its investment a year later.
According to Crain’s, the hotel was appraised at $110 million in May 2007 when it was refinanced, but in March 2010 the property was appraised at $51.2 million.
In May 2010, the lenders filed a foreclosure lawsuit in Cook County circuit court, claiming the hotel owners stopped making monthly debt-service payments in January 2010, Weiss said.
Weiss said the borrower, Wheeling Hotel Owner LLC, owed investors $94 million on the property.
At an auction, a lender can bid all or some of the debt. The hotel investors bid $63 million, reducing the overall debt to $31 million, but it is unclear whether Wheeling Hotel Owner LLC has any assets remaining to pay back the loan, Weiss added.
The investors, who now own the title to the hotel property, may turn around and sell it. But Weiss said he does not know whether that is imminent.
“Lenders are not in the business of generally owning properties,” Weiss said.
