The judgment against GFII DVI Cardel Sawgrass, the owner of theCrowne Plaza, is $21.5 million, a figure based on an $18.6 millionmortgage plus fees.

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The Crowne Plaza brand is a good one, says Scott Smith, seniorvice president at PKF Consulting in Atlanta. The foreclosure wasprobably a function of market conditions in the Sawgrass Millsarea, he says, namely the addition of many new hotel rooms in 2007and 2008, especially full service properties.

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Rich Lillis, senior managing director at PKF Capital, based inMiami, says that while he doesn't have specific data on theSawgrass area, which is in the city of Sunrise, his gut tells himthat this market has been hit even harder than other FortLauderdale submarkets by the economic downturn. "There are too manyhotel rooms," in the area, he says.

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The Broward County suburbs west of Fort Lauderdale, don't drawas many visitors as the areas to the east, says Lillis, who is anadvisor to Miami Beach-based LNR Partners, the special servicerwhich is handling the Crowne Plaza at Sawgrass Mills. Although theSunrise area does have Sawgrass Mills, which draws a lot ofvisitors, as does the nearby BankAtlantic Center, a largeentertainment and sports venue, and the many corporations withoffices in the area, the hotel market in West Broward doesn't do aswell as the eastern part of the county, where a greater proportionof visitors gravitate to be closer to the beach, the airport anddowntown, he says.

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Smith says that the problems in Broward County's hotel marketaren't that different from the rest of the country. The crop of newhotel rooms, which has come on line over the last few years, hasdrastically impacted the occupancy and average daily room rates inthe hotel market, which has produced a decline in RevPar (revenueper available room) since 2008 of 20% to 25%, on average, with somemarkets being down as much as 40%. With this much of a decline, hesays, "an hotel owner can't pay his debt service, especially if hehas high leverage."

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About 30% to 40% of all hotel loans in the US today aretechnically in default, "which doesn't mean you can't work themout, but these hotels are not satisfying the debt coverage ratios,"which were mandated by the loan documents, says Smith. "Even if thehotel owners are paying their mortgages, they need to have a debtcoverage ratio of 1.5% to 1.7%, which they often don't have," hesays.

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Based on operating results from 6,000 properties in the US, saysSmith, PKF has determined that the average decline in NOI from 2008to 2010, has been 35% for all property types, the result of anapproximately 16% decline in RevPar over the same period.

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In the Fort Lauderdale area, the RevPar decline in 2009 wassimilar to that of the US at around 16%, says Lillis, which meansthat area hotels also had a decline in NOI of about 35%.

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