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Union Investment extends exposure to US hotel investment market

Luxury Chicago hotel with jazz history acquired for UniImmo: Europa / Second US hotel investment in four months.

Union Investment has acquired a hotel in Chicago for its open-ended real estate fund UniImmo: Europa. The Hamburg-based real estate investment manager is extending its existing exposure to the US hotel investment market with the acquisition of this latest property, which is let on a long-term lease. Union Investment entered the market in December 2015 by acquiring the Godfrey Hotel in Boston. “This second investment underscores our reputation as a reliable and attractive partner to the hotel industry at international level. It also opens up the prospect of further off-market transactions in the US,” said Andreas Loecher, head of Investment Management Hotels at Union Investment Real Estate GmbH.

Union Investment’s first hotel purchase in Chicago is LondonHouse, located at the corner of Wacker Drive and North Michigan Avenue in the central business and financial district known as the Loop. The high-profile building is very famous locally and has a special musical history. This architectural landmark, constructed in 1922, hosted one of the most famous jazz clubs in the US during the 1950s and 1960s. A number of future stars launched their musical careers here, and some of the most popular live jazz albums were recorded in the building. It was fully refurbished between 2014 and 2016 by Oxford Capital and Angelo, Gordon and features 452 luxurious hotel rooms on Floors 3-22 of the London Guarantee & Accident Building, and the entire new 22-story architecturally synchronized Modernist glass tower. The highlight of the hotel in downtown Chicago is the tri-level rooftop bar, which offers spectacular views of the Chicago River, the urban skyline and Lake Michigan. The hotel is fully let to Oxford Hotels and Resorts Group LLC on a 25-year lease, thus providing stable long-term rental income for UniImmo: Europa. Oxford Hotels will operate the upper/upscale luxury segment hotel under the “LondonHouse Chicago – Curio Collection by Hilton” brand.

Union Investment acquired the property from a joint venture consisting of Oxford Capital Group LLC and investment advisor Angelo, Gordon & Co. The purchase price was around USD 315 million. “Following our joint deals in London and Boston, we are delighted to be expanding our partnership with Oxford Capital in the Chicago metropolitan region with the acquisition of this exceptional property,” said Andreas Loecher.

LondonHouse is the latest addition to Union Investment’s hotel portfolio, which comprises 52 properties with a total value of3.2 billion euros (USD 3.6 billion). Union Investment manages some 320 commercial buildings worldwide with a total value of around EUR 28 billion (USD 31.6 billion). The company has been operating in the hotel sector for over 40 years. In 2015, Union Investment was one of the most active European investors in this high-demand segment, with a total of six hotel acquisitions.

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