A day after a high-end hotel opened in the 101-story St. Regis Chicago skyscraper, new owners emerged.
Luxury hospitality investors Gencom and GD Holdings on Tuesday said they bought the 192-room hotel on the lower levels of Chicago’s third-tallest building.
The Chicago-based Magellan Development Group, which completed construction of the 1,191-foot-tall hotel and condo tower in 2020, said it would maintain a minority ownership stake. The terms of the deal were not disclosed.
The announced hotel sale is the latest twist in the $1 billion development of the tower designed by Chicago-based architect Jeanne Gang.
Since breaking ground in 2016, the project has endured the exit of its Chinese development partner, two name changes, a global pandemic, and a high-profile switch in restaurant operators.
Residents first moved into the tower at 363 E. Wacker Drive in late 2020.
the St. Hotel registry, part of Marriott International, opened Monday after interior construction was completed. The hotel is on the lower 11 floors of the building near attractions such as Navy Pier and Millennium Park.
“During the pandemic, Gencom saw a unique opportunity to purchase this asset while it was still under construction and strategically arranged to close the transaction once the property was delivered,” Gencom Chief Investment Officer Alessandro Colantonio said in a statement.
He added that “from the onset, we recognized the long-term value of this investment given the strength of the Chicago market and the significance of opening the first luxury hotel downtown in over a decade. Through this acquisition, Gencom and GD also strengthened their relationship with Marriott International, adding yet another high-end hotel brand to each group’s growing hospitality portfolios.”
Miami-based Gencom owns hotels with luxury brand names such as the Ritz-Carlton, Four Seasons, Hyatt, Fairmont and Auberge Resorts in its home state of Florida, as well as in destinations including Costa Rica, Bermuda, and Beaver Creek, Colorado. The St. Regis deal is its first in Chicago.
Denver-based GD Holdings is a US affiliate of Mexican textile giant Grupo Denim. GD Holdings also invests in several luxury hotel brands, including a Four Seasons purchase last year in Nashville, Tennessee.
St. Regis Chicago is within Magellan’s 28-acre Lakeshore East development along Lake Michigan and the Chicago River.
The investment in Chicago by Gencom and GD comes amid interest-rate increases and recent bank failures that have made real estate deals challenging to finance throughout the country.
“Really good sponsors are still getting deals done, and we think these guys are really good sponsors,” Magellan CEO David Carlins told CoStar News.
Magellan’s development of the skyscraper began in partnership with China’s Dalian Wanda Group, and the building’s initial name was Wanda Vista Tower. The initial plan was for the building, which later was rebranded as Vista Tower, to house the Wanda Group’s first US hotel.
Amid pressure from the Chinese government to cut back real estate developers’ investments abroad, Wanda sold its 90% ownership stake to Magellan in late 2020.
As part of an agreement to have St. Regis Hotels & Resorts to open its first Midwest location, St. Regis gained naming rights to the tower in late 2020.
Those major changes came early in a pandemic which also led to acclaimed Chicago restaurant operator Paragraph Group to back out of plans to have restaurants within the hotel.
Last year another Chicago-based restaurant group, Lettuce Entertain You, struck a deal to open a Japanese restaurant and Tuscan steakhouse in the hotel.
As the hotels and restaurants open for business, about 65% of the 393 luxury condo units in the tower have been sold, with a few more under contract, Carlins said.
“We continue to make sales,” Carlins said. “With the hotel opening and really showing the quality and lifestyle of the building, we think it’s going to increase the velocity of sales. I think a lot of people were waiting to see the hotel open.”