Odd couple plans new Streeterville tower
By Thomas A. Corfman
Feb. 24, 2007
http://www.chicagobusiness.com/cgi-bin/news.pl?id=23994
Developer Christopher Carley is planning a luxury hotel and condominium development a few blocks from the site where he once proposed building the tallest building in North America, before losing control of the project.
An unlikely duo of Mr. Carley and developer Michael Reschke, ousted chairman of Prime Group Realty Trust, has a contract to buy 2.3 acres just north of the downtown Sheraton Chicago Hotel & Towers for $60 million, sources familiar with the deal say. In addition to high-priced condos, the two also are considering adding a posh hotel like the Hotel de Crillon, which Mr. Carley once attempted to bring to the twisting tower, now called the Chicago Spire.
Any development faces steep obstacles, including a slowing condo market, scarce construction financing for high-end hotels and, for this particular location, the likelihood of costly environmental cleanup.
"That's why the site has sat vacant so long," says rival developer J. Paul Beitler, who also bid on the property and who has teamed with Mr. Reschke on other projects, such as a tweezers-shaped broadcast tower in the same area that hasn't gotten off the drawing board. "It's not like somebody just stumbled onto it."
However long the odds, the setbacks endured by Messrs. Carley and Reschke seemingly haven't diminished their ambitions.
Mr. Carley, CEO of Chicago-based Fordham Co., has been dogged by questions about the profitability of his recent condo projects, 65 E. Goethe St., the Fordham at 25 E. Superior St. and the Pinnacle at 21 E. Huron St. In July, he lost control of the 2,000-foot spire after failing to finance the $64-million purchase of the riverfront site on North Lake Shore Drive. Dublin-based Shelbourne Development Ltd. bought the site and took over the project, and a dispute with its executive chairman, Garrett Kelleher, cost Mr. Carley any day-to-day role in the development. Mr. Carley did not return calls requesting comment.
Mr. Reschke has also harbored ambitions for a record-setting skyscraper, including the tweezers tower. He resigned from Chicago-based Prime Group in 2002 after defaulting on $100 million in loans secured by his controlling stake in the company. He is better known for office buildings such as Citadel Center, the 1.5-million-square-foot tower at 131 S. Dearborn St. that he co-developed with Mr. Beitler.
Recently, Mr. Reschke has turned to other types of developments, such as a proposed 35-story condo project at 10 E. Delaware Place and a proposed hotel conversion of the lower floors of an antiquated office building at 208 S. LaSalle St.
FEASIBILITY STUDY
For their first endeavor together, Messrs. Carley and Reschke would buy the 2.3-acre site, now a parking lot, from the St. Louis parent company of the Adam's Mark Hotel chain, which paid $46 million for the parcel seven years ago.
"It is fair to say we are in the midst of a feasibility study," says Mr. Reschke, chairman and CEO of privately held, Chicago-based Prime Group Inc., which is no longer affiliated with Prime Group Realty Trust.
The site is bounded by Park Drive, an address that would have "a neat little cachet," he adds. But a key would be landing "an internationally famous, five-star (hotel) flag, and there are many out there," he says.
In a classic real estate gambit, the two are looking to sell off the northern half of the site in hopes of using the proceeds to help pay for the southern portion, which they would develop themselves, sources say. The total site is zoned for about 1.6 million square feet of space. To finance construction of an 800,000-square-foot building on the southern half, the pair would have to raise at least $200 million.
Ironically, Mr. Carley could now be competing for luxury-home buyers against his former spire, designed by acclaimed architect Santiago Calatrava. Mr. Carley is still entitled to 15% of the profits of that project, according to a complaint filed by one of his prospective lenders. The case, filed in September in Cook County Circuit Court, sought only information regarding the deal with Shelbourne. It was settled last month.
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