CHICAGO-An upcoming performance at the Shubert Theater will include a nearly $30-million repositioning that not only will renovate the Downtown stage venue, but create a hotel on the building’s upper 15 floors. The hotel rooms will replace class-C office space at 22 W. Monroe St. that is just 54% occupied, according to the city’s department of planning and development.

A group that includes Nederlander Organization, Northern Realty Group and Montclair Hotel Investors is asking for $6 million in tax increment financing, a request likely to be granted by the city council following a favorable recommendation this week from the community development commission. The package would include a $2-million developer’s note at 8% interest, as well as payouts totaling $4 million during the renovation project, which the team hopes to complete by the fall of 2004.

Michael Tobin of Northern Realty says the developers are talking with potential construction lenders, but the money will not be forthcoming until the city council gives its approval. The developers are putting up $3.35 million in equity, he says.

Nederlander bought the 96-year-old Majestic Building at 22 W. Monroe St. in 1991, according to Steve Patterson, project manager for the department of planning and development. It later sold off the top 15 floors to Shubert Hotel Associates, LLC, which remains part of the current project.

In addition to being nearly half-vacant, the office space is “very marginal,” says architect Larry Booth. Plans call for 128 hotel rooms of about 350 feet each, with rates under $150 a night, Tobin says.

Hampton and Fairfield Inn were mentioned as possible flags for the hotel, which will have an entrance on Monroe Street but a lobby five years above street level.

The owners will seek landmark designation for the property, allowing it to receive historic preservation and façade easement money. “We were lucky the theater exists, because we’re able to create a real unique hotel in a manner that couldn’t be duplicated today,” Tobin says.

The tam’s construction manager is looking to get bids this summer, and the theater has blocked out weeks in the summer of 2004 to go dark while the building’s façade and decorative finishes, as well as a new two-story lobby is created.

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