A hotel that was built on Chicago’s Navy Pier during COVID-19 and whose opening was delayed by the pandemic has secured $60 million in long-term debt to replace construction financing despite a still-challenging lending environment.
Maverick Hotels & Restaurants in January took out the new debt on the 223-room Sable at Navy Pier Chicago hotel, according to Cook County property records.
Chicago-based Maverick and Swiss investment partner Acron secured the loan from an affiliate of Hallandale, Florida-based Kawa Capital Management, according to Cook County property records.
The refinancing comes as interest rates have remained persistently high, and despite Chicago being a particularly difficult city to refinance a hotel in, said Maverick founder and CEO Bob Habeeb.
“The debt markets remain stressed,” Habeeb said. “There is a thaw, but with interest rates staying where they are, with the volatility in the economy and with Chicago being one of the most difficult markets in the country to get debt in, it hasn’t been an easy market.
“This hotel is in a marquee location with a great brand, which helped us get refinanced.”
The Kawa loan, which matures in early 2027, replaced a similar amount of debt, including mezzanine financing, that was used to build the hotel, according to Crain’s Chicago Business, which previously reported the refinancing.
New debt replaced loans including an approximately $44.3 million construction loan from CIBC Bank, according to property records.
The seven-story hotel at 900 E. Grand Ave. began construction in 2018, and it was completed in late 2020, less than a year into the health crisis. That led the developers to delay the opening of the Hilton-affiliated hotel until spring 2021.
“We were blessed that the hotel started off strong,” Habeeb said. “There was a lot of pent-up demand in the marketplace, and with the hotel opening when it did, we received so much national publicity. That helped us take off like a rocket.”
The developers put the hotel on the market for sale in 2022, but no deal materialized. Maverick and Acron negotiated several loan extensions with CIBC before landing the loan from Kawa, property records show.
Habeeb said there are no immediate plans to re-list the property for sale amid challenging capital markets nationally.
“We don’t really have a plan beyond just getting the financing stabilized,” he said. “It took us longer to get our takeout financing than it normally would, given the circumstances. Now that we’ve got that, it gives us time to step back and see what happens as the market recovers.”
The hotel benefits from being within one of the biggest tourist attractions in the Midwest, but its location outside the central business district was viewed as a likely challenge during cold-weather months when it was proposed.
Hilton’s reservation system has helped offset seasonal challenges by pulling in smaller meetings and conferences outside peak season, Habeeb said.
Maverick and Acron own a leasehold interest in the hotel, which was built on the publicly owned property that juts into Lake Michigan. Navy Pier is known for views of the skyline and the lake, as well as attractions such as a massive Ferris wheel, theater, children’s museum and evening fireworks displays.
For the record
Brandon Perdeck and Neil Freeman of Aries Capital procured the loan for the hotel’s owners.