Oxford Lodging and Perry Capital Acquire Chicago's Allerton

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. October 14, 2008

CHICAGO, IL, November 10, 2006. -The 443-room Allerton Crowne Plaza Chicago, the historical landmark-designated 1922-24 Chicago property that helped spur the redevelopment of North Michigan Avenue into the city's Magnificent Mile, was purchased today by ALT Hotel Partners, LLC - a joint venture between Oxford Lodging Advisory & Investment Group, LLC, of San Francisco, and Perry Capital of New York - from FelCor Lodging, L.P, a subsidiary of FelCor Lodging Trust. CB Richard Ellis Hotels arranged the sale.

The new owners plan a $10-million renovation intended to update the hotel's public areas and guest rooms with contemporary features while maintaining its landmark, architecturally significant presence at the heart of Chicago's famed shopping, dining and cultural district. The project will include relocation of the hotel lobby back to its original 2nd-floor setting, where it will be combined with the existing bar and restaurant, and conversion of the third floor into an elaborate ballroom and meeting space for weddings, banquets and formal events.

The landmark hotel, famous for being one of Chicago's first high-rise buildings, will be managed by Kokua Hospitality, LLC. The announcement was made jointly today by Robert D. Kline, president of Oxford Lodging Advisory & Investment Group, LLC, and Robert Stern, managing director of Perry Capital and head of Perry Real Estate Partners, the real estate investment arm of Perry Capital, a $13 billion private investment firm. The acquisition represents the two companies' first investment together.

Chicago's first high-rise building to be built with pronounced setbacks, towers and upper-story design elements encouraged by the new municipal zoning laws of the 1920s, the Allerton Hotel represents a rare Chicago example of North Italian Renaissance architecture, featuring decorative brickwork, carved stone details and a picturesque roofline evocative of Milan and Verona in the 14th and 15th centuries. Built over a span of three years by the Allerton House Company, a national chain of "club hotels" combining the services of a hotel with the sociability of a private club, the 25-story hotel is credited with helping to turn Chicago's North Michigan Avenue into a chic boulevard of exclusive stores, restaurants and clubs that was later christened the Magnificent Mile.

The Allerton is probably best known locally for its Tip-Top-Tap, the legendary 23rd-floor cocktail lounge and club that served as the home of Don McNeil's "Breakfast Club" radio show in the 1950s. The Tip-Top-Tap closed in the 1960s, however the neon Allerton and Tip-Top-Tap signs remain as iconic symbols of the Chicago skyline.

The acquisition of the Allerton Hotel comes on the heels of the February 2006 purchase by an Oxford Lodging-led investment group of another Chicago landmark in the Magnificent Mile district, the 1928 Best Western Inn of Chicago. Oxford Lodging is currently embarking on a multimillion-dollar renovation of the 357-room Ohio Street hotel slated for completion in early 2007. To kick-off the project and signal its commitment to the City of Chicago, Oxford Lodging repaired and relit the rooftop neon Inn of Chicago sign during a nighttime ceremony earlier this year.

"Oxford Lodging has its long-term investment sights set on Chicago primarily because the city has done such a tremendous job maintaining its allure with the three primary hotel audiences: business, group and leisure travelers," said Kline. "The Allerton is a perfect fit for us given our success acquiring, managing and renovating historic urban properties with an established sense of place. Much like we're doing now with the Inn of Chicago around the corner, we're excited to be breathing new life into a local landmark while maintaining its rich architectural, cultural and civic heritage."

The new owners plan to leverage the Allerton's history, name awareness and popularity with convention, business and leisure travelers.

Robert Stern of Perry Capital explains, "We were attracted by this opportunity because of the increasing depth of Chicago's hotel demand, the Allerton's longstanding place within Chicago's history, and its prime location on Michigan Avenue. Chicago remains a strong business, convention and leisure destination - and we're fortunate to be working with Oxford Lodging to be able to revitalize such a prolific piece of the city's architectural and historical heritage."

The hotel's prime Michigan Avenue location between Huron and Superior streets puts it steps from the world-class shops, restaurants, museums, galleries and other attractions of the Magnificent Mile, including Bloomingdale's, Lord & Taylor, Marshall Field, Neiman Marcus, Saks Fifth Avenue, Nordstrom, Nike Town, Apple Store, Hard Rock Caf'e, Mike Ditka's and ESPN Zone. Also within walking distance are the Chicago campus of Northwestern University, Water Tower Place, Chicago Children's Museum, Art Institute of Chicago, Museum of Contemporary Art, Navy Pier, the John Hancock Building and Shedd Aquarium.

The Allerton Hotel becomes the second hotel to be managed by Kokua Hospitality. Maki Bara, co-chairman of Kokua, explains that, "Kokua evokes the Hawaiian spirit of service and helping one another. These values are fundamental to our hotel operating philosophy."