Crescent Heights Backs Out Of $35M Deal For Raffaello Chicago Hotel
A legal dispute between Crescent Heights and the board of a Streeterville condo-hotel appears headed back to court. Miami-based Crescent Heights reneged on a $34.5M deal to buy the 175-room Raffaello Chicago hotel, Crain's Chicago Business reports. The sale was approved by 98% of the owners of the building, well over the 75% required under state law to approve a condo deconversion.
Condo-hotels allow investors to buy one or more rooms from a developer. Those owners may use the rooms however they want, and collect revenue when they are rented out. Condo-hotels were popular in the previous real estate cycle, but many of the Raffaello's investors saw their rooms decline in value, with some selling at a loss.
The Crescent Heights deal would have placed the Raffaello under control of a single owner. An email to the condo board announcing the broken deal indicated that Crescent Heights had another investor in place, and would have flipped the hotel over to that partner. The two parties could not agree on a sale price, and Crescent Heights refused to pay $750K for a 60-day extension to land another partner.
The condo board's two options are to find a new buyer, or take Crescent Heights to court. The two sides settled a lawsuit last fall over building management and fees. The board has alleged that Crescent Heights improperly allocated expenses and income on the hotel. The Raffaello and Trump International Hotel & Tower are the only condo-hotels in Chicago.
