Buildings

BLUHM SELLS STAKE IN DRAKE HOTEL

By:  Alby Gallun June 22, 2011

(Crain’s) – Neil Bluhm is out and a New York investor is in as the result of a reshuffling of ownership at the historic Drake Hotel.

Mount Kellett Capital Management has bought out two of three investors in the 537-room Michigan Avenue hotel:  Mr. Bluhm’s Walton Street Capital LLC and New York-based Westbrook Partners LLC, according to people familiar with the transaction,  Staying in is a third partner, Chicago-based hotel investment firm Lodging Capital Partners LLC.

The trio paid $55 million in 2006 for the hotel 140 E. Walton St., assuming a ground lease for the land under the landmark building.

Founded by former Goldman Sachs executives in 2008, New York-based Mount Kellett invests in a variety of asset types and recently disclosed that it raised $732 million for its second fund.  It’s unclear how much the firm paid for its stake in the Drake, or how large that stake is.  Executives at all four firms did not return phone calls Tuesday.

The local hotel investment market has rebounded in the past year, as investors try to buy in with the recovery still in its early stages and prices on the coasts already at lofty levels.

The Westin Chicago River North sold last year for $165 million, or about $389,000 a room, while Annapolis, Md.-based Chesapeake Lodging Trust recently paid $129 million, or about $350,000 a room, for the W City Center in the Loop.

Those sales, says Jones Lang LaSalle Inc. Executive Vice-president Adam McGaughy, have “really kind of gotten people’s attention.”

 

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