November 18, 2016
Summit Hotel Properties acquired the 206-room Hyatt Place in downtown Chicago, at 28 N. Franklin St. The Austin, TX real estate investment trust paid $74 million to OTO Development, the South Carolina-based company that built and delivered the hotel late last year. The buy represents the first Chicago downtown hotel for Summit, which currently owns Hyatt Place hotels in Lombard and Hoffman Estates, IL.
Summit reported paying an 8% cap rate, based on the asset’s 2017 net operating income. The higher capitalization rate is likely due to concerns investors have over extra supply coming to the market, as well as a sluggish year for Chicago’s hotel industry.
“I think the lack of buyers in the current environment for such a high-value target clearly worked in our favor,” said Summit’s CEO Dan Hansen in a recent conference call with analysts.
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