Crain’s reported that Ashford Hospitality Trust’s Westin O’Hare is in danger of defaulting on a $101 million loan because of falling occupancy levels and room rates at the 525 room hotel. A report by a special servicer overseeing the loan said the hotel is no longer generating enough cash flow to cover its monthly interest payments and AHT is asking for debt service relief during the downturn. The report said the loan is in danger of imminent default. AHT bought the hotel in November 2006 for $125 million and financed it with a loan from Morgan Stanley which packaged it with other loans and sold them as commercial mortgage backed securities. AHT spent $2.2 million of its own money to cover the deficits in the first 5 months of the year. The loan was transferred to Centerline Servicing when AHT said it would be unable to continue to fund the shortfalls.
This is precisely the scenario I've be talking about. I'm expecting many REIT's to cut loose some of their dogs if the don't see the prospect of value recovery when feeding the beast of negative cash flow.
If I understand you, you are saying AHT bought the Westin Hotel at O'Hare airport for 100 million dollars and financed ________how many million with NON RECOURSE mortgage and now AHT is willing to walk away from the hotel. This may mean they are playing hard ball with the lender>>