According to Fitch Ratings, an additional $1.2 billion of loansin Fitch-rated CMBS entered special servicing--including thehigh-profile hotel property in Washington, DC--in November. Alsoincluded in the 95 new loans was New York City's $3-billion PeterCooper Village/Stuyvesant Town loan, which became the secondlargest loan to officially transfer to special servicing. With theNovember increase, specially serviced loans now total 7.8% ofFitch-rated CMBS.

The Mayflower's inauspicious status is indicative of largertrends in the retail and hotel asset classes, which Fitch says willcontinue to see the most adverse and immediate effects. Additionalhigh-profile hotel properties transferring to special servicing arelikely, according to senior director Adam Fox. Fitch Ratings wasunable to return a call in time for publication.

Defaults in the DC area are indeed likely to increase, accordingto Greg Leisch, CEO of Delta Associates--but not at the same rateas they did in 2009. Leisch points to changes in the tax laws andnew REMIC rules that should ease some of the defaults. Also, thereare signs that capital is moving back into the DC market, albeit ata glacier pace.