Wyndham O'Hare buyer targets suburban hotels
Eric Chang
前會長章詣遠 doesn't consider himself “a hotel guy,” but that isn't stopping him from taking a gamble on the local hospitality market.
His focus: the suburbs, where hotels have been slower to recover than those downtown.
In August, an affiliate of U.S. Pacific Management Inc., Mr. Chang's Chicago-based real estate management and investment company, paid $5.1 million for the former Wyndham O'Hare, a 466-room hotel in Rosemont that's been closed since January 2010.
U.S. Pacific also owns a shuttered 120-room hotel in North Aurora that it bought for $3.6 million in 2008, before the market bottomed out.
“It's not only location, location, location — like the cliché — it's the timing of things,” said Mr. Chang, chairman of the company. “I believe this is a good time to buy the hospitality industry properties.”
This is especially true around O'Hare International Airport, Mr. Chang said, as more international flights are added and the city works to boost tourism.
While other suburban submarkets have continued to struggle after the recession, the O'Hare area has benefitted from its status as an alternative to downtown, picking up overflow when other hotels are full, said Ted Mandigo, director of Elmhurst-based hotel consulting firm T. R. Mandigo & Co.
Because of its reliance on airport traffic, O'Hare is often the first hotel submarket to take a hit during a downturn and the first to bounce back when the economy improves, Mr. Mandigo said.
“If people cut back on business travel, it affects O'Hare; if people's income is affected and they don't take leisure travel, it affects O'Hare; if you cancel conventions, it affects O'Hare,” he said. “They get hit by all of those factors.”
Although U.S. Pacific acquired the former Wyndham for a fraction of its previous sale price — Seattle-based Kennedy Associates Real Estate Counsel L.P. paid $26 million for the hotel in 2004 — Mr. Chang said his firm will have to spend a yet-to-be-determined amount of money renovating the hotel, fixing water damage and asbestos issues.
The total cost and completion date depends on how quickly the firm reaches a deal with a hotel franchise, which will dictate what improvements it needs to make, Mr. Chang said. U.S. Pacific is in talks with six, though he declined to disclose company names.
The company is also in the middle of renovating the hotel in North Aurora, which is closer to landing a flag, according to Mr. Chang. He said he hopes to open both properties by late spring, just in time for the summer travel season.
A native of Taiwan, Mr. Chang, 58, came to the United States in 1978 as a graduate student. In 1985, after earning his Ph.D. in engineering from Northwestern University, he started Glenview-based U.S. Asia Group Inc., a residential and commercial brokerage that specializes in serving the Asian community both in Chicago and overseas.
To date, he has completed more than $500 million worth of transactions in the Chicago area, including the sale of 12 units in Trump International Hotel & Tower to Chinese investors lured to the United States by its comparatively low prices.
“If you compare the high end of the Chicago market to Beijing and Shanghai ... (Chicago properties) are bargains,” he said.
After establishing himself in the local brokerage community, Mr. Chang used his connections to form U.S. Pacific, the investment company, in 1997.
In addition to the two suburban hotels, the firm's U.S. portfolio includes about 200,000 square feet of retail space, 120,000 square feet of office space, more than 200 apartments, a couple of warehouses and several vacant lots. Aside from some land in Wisconsin, all of the properties are in Illinois, where U.S. Pacific has partnered with individual investors from the local Asian community.
The firm also controls and manages a similar-size portfolio in China, including a pair of hotels, office space and land slated for commercial development. Like the U.S. properties, all are part of U.S. Pacific's diversified investment strategy, which focuses on adding value to the properties the firm acquires.
“I don't look at one segment of (the) industry, of properties,” Mr. Chang said. “I'm looking for good deals.”
No comments:
Post a Comment