With this purchase Los Angeles-based Canyon, through its Canyon Value Opportunity Fund, will add the 40-story hotel, located at 71 East Wacker Dr. and one block from Michigan Avenue, to its holdings.

The purchase was made in an all-cash deal from a real estate mortgage investment conduit. According to company executives, Hotel 71 was previously security for a senior loan in a CMBS pool. From there it was purchased as REO in July 2008. Canyon found opportunity in that.

"The acquisition of Hotel 71 is a great example of Canyon's ability to navigate the realm of CMBS servicing," says CCRA principal Jonathan Roth. "Our team negotiated the purchase with the special servicer and received approval from the controlling note holder of the former senior loan and the REO asset."

Canyon's current acquisition strategy focuses on hospitality investments in top US cities with good travel fundamentals.

"Chicago is widely viewed as one of the most strategic hospitality markets in the country, in large part due to the fact it is home to the largest convention center nationally, and it is a gateway travel city," says senior director Richard Bosworth. "Chicago presence is a critical strategic component of a hotel company's growth plan and the global interest we have received from both U.S. and international flags speaks to the hotel's strategic location, asset quality and the repositioning opportunity."