LaSalle Hotel REIT abandons luxury Chicago project

CHICAGO LaSalle Hotel Properties has given up on plans to develop a luxury boutique hotel in a landmark building in downtown Chicago.

The Bethesda, Maryland-based REIT has sold, through joint venture subsidiary Modern Magic Hotel LLC, the 12 floors it owned in the 52-story IBM Building after the real estate sat vacant for two years. LaSalle expects to take a US$8 million loss on the failed project.

LaSalle, which owned 95% of the joint venture with Oxford OG Hospitality Chicago, had planned to develop a 335-key luxury hotel on floors two through 13 at a cost of between US$100 million and US$200 million. The hotel was to debut this year, but the recession forced the project to be put on hold before being scrapped altogether.

LaSalle sold the real estate to an unidentified buyer for US$58.8 million. It acquired the property in 2008 for US$46 million, but will take a loss after pre-development expenses and transaction fees are figured.

The IBM Building, designed by legendary architect Mies van der Rohe, sits adjacent to Trump International Hotel & Tower Chicago.