Marriott International (NASDAQ:MAR) is paying $500 million to acquire the 1,218-room Sheraton Grand Chicago Riverwalk hotel, one of the city’s biggest lodging properties.
According to a report in The Real Deal, the $300 million portion of the sale was first agreed upon by the companies in 2017 as part of a settlement for a lawsuit that Tishman brought against Marriott when the lodging company paid $13 billion in 2016 for Starwood Hotels, which owned the Sheraton brand at time. Tishman objected to the deal by claiming Marriott violated a contract by putting the Sheraton in direct competition with nearby Marriott properties. Under the terms of the settlement, Tishman could force Marriott to buy the Sheraton for $300 million in exchange for not requiring Marriott to abide by Starwood’s non-compete clause for the Sheraton property.
The remaining $200 million of the purchase price covers the underlying ground at the property, which Tishman developed and opened in 1992.
In an earnings call today, Marriott Chief Financial Officer Leeny Oberg stated the building’s purchase price “reflects a liability that we established on the balance sheets, frankly, years ago as part of the overall transaction. So, it does obviously impact our available cash for the year.”