SAN DIEGO-Some $260 million of nearly $630 million in debt thatencumbers the landmark Hotel del Coronado has been placed inspecial servicing as upscale and luxury hotels continue to sufferfrom the economic downturn. The placing of the debt with specialservicer LNR Partners is not likely to lead to foreclosure,analysts say, but it raises a number of possibilities as the debtheads for a January maturity.

“I don’t think there’s a big likelihood of seeing this as aforeclosure,” says Alan Reay, founder and president of Irvine,CA-based Atlas Hospitality Group. However, Reay says that the $260million that has been placed with the special servicer, which isCMBS debt, could be “in play” if LNR so chooses.

The hotel is owned by a joint venture called SHC KSL PartnersLP, according to a public filing by Chicago-based Strategic Hotels& Resorts Inc., which owns a 45% stake in and is the generalpartner in the joint venture, which also owns an adjacentresidential hotel-condominium development called North BeachVenture. According to the filing by Strategic, the $260 million inCMBS debt is part of $610 million in non-recourse mortgage andmezzanine loans that the joint venture entered into in January in2006, which matures in January 2011.