|By Thomas A. Corfman, Chicago Tribune|
Knight Ridder/Tribune Business News
July 23, 2004 - Swig Co., which co-developed the Chicago Fairmont Hotel in 1987, has bought out its Saudi partner in a transaction that values the high-end hotel at more than $150 million.
The sale is another sign of a quickening in hotel investment activity that is outpacing the improvement in occupancy and room rates. Regular rooms at the Chicago Fairmont cost around $200 a night, while suites are more than $350.
"Some buyers think there is some good upside potential," said hotel consultant Ted Mandigo, president of Elmhurst-based T.R. Mandigo & Co. "The purchase prices are less than the replacement costs, and they can get some good bargains."
Swig Co. acquired the half interest in the 692-room hotel from Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud, said Rick Swig, whose father, hotelier Richard Swig, turned the flagship San Francisco Fairmont into a luxury chain that now has 43 properties worldwide.
The family sold its interest in the hotel chain in 1998, but retained its stakes in the Chicago and San Jose properties, which are co-owned by Prince Alwaleed.
The Prince acquired his 50 percent stake in the 37-story Chicago Fairmont in the mid-1990s from a group that included Chicago development venture Met Structures.
Swig declined comment on the price of the hotel, but sources said it was more than $150 million. Fairmont Hotels & Resorts will continue as manager.
The acquisition made particular sense for the family-owned Swig Co. because it gave them complete ownership.
"You want a top 10 location in a top 10 market, ... and you want a great brand," said Swig, president of RSBA Associates, a San Francisco hotel consulting and asset management firm. "And we had a bird in the hand."
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