Carey Watermark Investors Buys Renaissance Chicago Downtown for $139M

Carey Watermark lodging REIT picked up the 553-guestroom Renaissance Chicago Downtown Hotel from the Royal Bank of Scotland Group for $139 million, marking downtown Chicago's largest hotel trade this year.

Renaissance Chicago Downtown Hotel

Carey Watermark Inc. has been quite acquisitive all year, and the lodging REIT wraps up 2013 with the purchase of the Renaissance Chicago Downtown Hotel. CWI picked up the 553-guestroom property from the Royal Bank of Scotland Group plc for $139 million, marking downtown Chicago’s largest hotel trade this year.

CWI relied on a $90 million non-recourse mortgage loan with an effective annual fixed interest rate of 4.71 percent to partially finance the acquisition. Describing the price tag as “attractive,” CWI got quite a bit of bang for the buck.

Carrying the address of 1 W. Wacker Drive, Renaissance Chicago towers 27 stories above the Chicago River and features 35,000 square feet of meeting space and 7,800 square feet of retail space. The 22-year-old building, which occupies a 1.2-acre site that is under a long-term ground lease through June 2087, has been regularly renovated since its debut, with its most recent upgrade taking place earlier this year. And CWI will continue the trend; the REIT plans to invest approximately $27 million in capital improvements. The future bodes well for the asset.

“Specifically, the Renaissance Chicago Downtown is expected to experience strong near-term growth given the new owner’s planned improvements, the power of the Marriott brand affiliation, and the irreplaceable nature of the real estate,” Adam McGaughy, managing director with commercial real estate services firm Jones Lang LaSalle’s Hotels & Hospitality Group, said in a prepared statement. JLL marketed the property on behalf of the seller.

With the Renaissance Chicago transaction, CWI closes the year with an even dozen acquisitions. Most recently, the REIT snapped up the 177-room Hawks Cay Resort, the Florida Keys’ largest destination resort, for $133.8 million in October. And CWI grabbed five assets in a single deal in February with the purchase of a 632-room collection of hotels within the Hilton Worldwide portfolio of brands for $104 million.

CWI, an entity advised by affiliates of W. P. Carey Inc. and Watermark Capital Partners, closed with a total equity raise of $582 million in September.