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CHICAGO-LaSalle Hotel Properties has pushed back its hotel conversion of the a few floors of the former IBM office plaza, at 330 N. Wabash, by nearly two years. The company originally set a “fast-track schedule” for the $175 million project, wherein construction would have begun by the second or third quarter of this year, with a planned hotel opening in 2010. However, under the modified schedule, construction will only just be beginning in 2010, and the hotel is expected to open in 2011, says Hans Weger, CFO of LaSalle Hotel Properties.

“Given the current economic environment and liquidity of banks, this is one of the steps we’re taking to provide cash,” Weger tells GlobeSt.com of the change in plans. “Putting out $100 million next year didn’t look like the best option.”

The conversion is the product of a joint venture between LaSalle Hotel Properties, based in Bethesda, MD, and Oxford OG Hospitality Chicago, based here. The companies acquired 12 floors in March for $46 million. Floors two through 13 of the building represent a total of 375,000 sf and were purchased from Prime Group Realty Trust, based here, which will continue to own the rest of the 52-story building. The joint venture is going by the name of Modern Magic Hotel LLC, in which LaSalle Hotel Properties has a 95% controlling interest, with the remaining 5% owned by Oxford.

The hotel is expected to have up to 335 rooms. Standard guestrooms were planned to be approximately 525 sf with 9.5-foot ceilings and floor-to-ceiling windows. About 20% of the rooms will be suites which will range in size from 775 sf up to 2,350 sf, according to a release from LaSalle. The hotel rate is expected to be in excess of $500 per night, based on luxury rates for last year, the company has said. The hotel will also offer approximately 17,000 sf for meetings and events, including a 5,000-sf ballroom. Additionally, it will have a 9,000-sf restaurant, a lobby bar, wine room, fitness center, indoor pool and spa.

“We’re very focused on the Chicago market,” Weger says. “Long term, Chicago is one of the strongest markets in the U.S., and we want to be in it. The area of this hotel is near the Chicago Loop, which is an area where Chicago continues to move forward and grow.”

The building was designed by architect Mies van der Rohe and completed in 1971, and has been designated a historic city landmark. The building is near the Chicago River, the Michigan Avenue Corridor and is adjacent to Hotel Sax Chicago, which is also owned by LaSalle Hotel Properties. Other hotels in the immediate area include Westin River North, Trump International Hotel and Tower (directly behind the plaza) and Renaissance Chicago Hotel.

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