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Plans for Hotel Near Chicago's McCormick Place Resurface After Years of Delay

Olde Prairie Block Owners LLC, Led by Developers Pam Gleichman, Karl Norberg and Gunnar Falk, Submit
Plans to Bankruptcy Court for Development of a Convention Hotel, a Small Boutique Hotel and a Data Center

By Kathy Bergen, Chicago TribuneMcClatchy-Tribune Regional News

Oct. 19, 2012--The prospect of private hotel development north of McCormick Place, delayed for several years, resurfaced Friday in federal bankruptcy court.

Olde Prairie Block Owners LLC, led by developers Pam Gleichman, Karl Norberg and Gunnar Falk, indicated it has struck deals with three buyers for a 3.67-acre parcel at 330 E. Cermak Rd. The buyers have plans for a convention hotel, a smaller boutique hotel and a data center, the filings indicate.

The plan represents one last attempt by Olde Prairie to retain and develop property across the street from the convention center's administrative offices and its West Building. Olde Prairie contends the plan will allow it to repay lenders in full and get development under way.

If the court rejects this plan, as it did earlier ones, this foreclosed property and a smaller, adjacent one at 230 E. Cermak will go to lender CenterPoint Properties Trust, an industrial real estate company owned by the California Public Employee Retirement System, or CalPERS. Centerpoint, which is owed about $70 million, has until Oct. 25 to respond to Olde Prairie's reorganization plan.

If Centerpoint takes over the properties, it is expected to put them up for auction.

Judge Jack Schmetterer has said he wants documentation on the financial viability of the plans.

The larger parcel, known as the Lakeside parcel, includes the historically significant American Book Co. building. The parcel is viewed as critical to future growth of the city's convention business.

City and convention officials long have said further hotel and entertainment development is needed to meet the needs of trade shows and to enliven the neighborhood. The Metropolitan Pier and Exposition Authority, the state-city agency that owns McCormick Place, is expanding the Hyatt Regency McCormick Place, which it also owns.

The largest portion of the Lakeside parcel would be sold for $150 million to Ground Lease Capital Partners LLC, a New York-based firm headed by Steven Waldman.

The plan is to build a 1,067-room hotel with 110,000 square feet of retail, banquet facilities and parking. The buyer would pay $70 million at closing, and lease back the property to Olde Prairie for 99 years. The other $80 million would be paid when the hotel was ready for occupancy.

A second piece of the Lakeside parcel would be sold for $15 million to JMB Capital Partners Master Fund LP, a Los Angeles-based hedge fund run by Jonathan Brooks. The fund had provided Olde Prairie with a debtor-in-possession loan and is owed more than $3 million. A data center is planned for this piece.

A third slice of the parcel would be sold for $30 million in to Global Builders Inc. for development as a boutique hotel.

Earnest money on the respective deals is expected to be deposited soon, according to Olde Prairie attorneys.

Separately, Gleichman has control over six properties in historic Motor Row, just west of McCormick Place, and is working on deals to develop them for hotel, restaurant and entertainment uses.

Tribune reporter Melissa Harris contributed.


(c)2012 the Chicago Tribune

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