$24M Portfolio of Nine Hotel Loans Hits Market

Reay has been saying for some time now that hotel lenders could not extend loans indefinitely and that he expected 2010 would be the year that the lenders would finally begin to take action on troubled loans. "It's just a sort of acceptance from the lender's standpoint that they can't continue to extend these loans, either from a manpower standpoint because it is very time-consuming to deal with these issues, or from a financial standpoint because they need to start cleaning up their balance sheets," the Atlas president says.

The loans were all financed between 2005 and 2009, at rates generally ranging from 7.5% to 8%. No notices of default have been filed on the loans, but they are probably classified in technical default, Reay says, either operating under modified payment plans or producing cash flow that is below certain debt-coverage ratios. He says the lender will consider offers for the full portfolio or for individual loans.

The six California hotels are the 60-room Best Value in in Anaheim, the 47-room Gardena Terrace Inn in Gardena, the 90 -room Days Inn Tulare in Tulare, the 161-room Hotel de Oro in Santa Nella, the 120-room Homeland Inn in Buttonwillow and the 67-room Economy Inn in Barstow. The other three are the 79-room Ramada Inn in Forest Park, GA; the 59-room La Quinta Inn in Las Vegas and the 123-room Hotel Suites of America in Duncanville, TX.

In an interview with GlobeSt.com in April, Reay said that he was sensing a sentiment from lenders that delaying tactics were not working with respect to the troubled loans, and he noted hat the number of hotels operating under forbearance agreements in California was between 1,000 and 1,200 at the time. Foreclosure is a protracted and often expensive process for the lenders, however, so he predicted that many lenders would turn to selling loans rather than foreclosing.