And while we are on the topic of hotels...

Crain's also reports that Oaktree Capital Management is going to auction off Robert Falor's equity in Hotel 71 on East Wacker Drive (you know, the old Executive House, a late-'50s creation that Falor was trying to turn into a condotel). The bidding takes place on October 3 unless they can find an angel to take out Oaktree's loan.

This is sort of a tricky but fun type of deal, in that OCM does not own the loan on the hotel (there is a separate foreclosure action there that will have to be worked out), but has a loan on Falor's equity. If the reports are correct, basically it amounts to a mezzanine loan with the assets pledged on the debt. I used to see these deals all the time in the late 90s and early 2000s.

But now that the bankruptcy court seems to be signing off, it will be even easier to conduct such an auction because, IIRC, it would essentially be one of assets under the auspices of the Uniform Commercial Code. Oaktree apparently offered to get out for $35 million (still a decent but not OCM-like return on a $27 million loan, through you have interest and penalties and third-party fees to consider, not to mention the senior debt), so if you want a hotel that has just not, for whatever reason, been on anyone's radar screen for about 20 years, now's your chance. But my money is on the Oaktree guys; they are the masters of turnarounds.

(Full disclosure: OCM is a former client, but I had no involvement with this project.)