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DALLAS-Four hotel properties in the Dallas-Ft. Worth metroplex hit the foreclosure list in a death knell sure to sound for more hoteliers in the coming months, say industry analysts. Rumors are spreading like wildfire that the Adam’s Mark Hotels & Resorts is looking to sell in the wake of pressure from its banks.

The metroplex has been buzzing since articles were published about the 286-room Westin Beechwood hitting the list just 45 days after its grand opening. David R. Farmer, Beechwood Co.’s president and CFO, says he’s confident that a deal can be cut with lender, CoServ Realty Holdings of Denton, TX, before the Dec. 4 auction. If not, other legal measures will be sought to stave a bankruptcy, he tells GlobeSt.com. The fiscal woes are being laid at the doorstep of the Creeks at Beechwood, a Greg Norman-designed championship golf course. The two properties are bundled in a cross-collateralization loan of $10 million for the golf course and $43 million for the hotel.

But, the Westin Beechwood is just one on the list. George Roddy Sr.’s Foreclosure Listing Services of Dallas this month alone has notices tacked up for the Town Lodge, a 40,000-sf property at 1101 Watson Rd. in Arlington, with a $2.4-million value; Nilay Hospitality’s 22,000-sf hotel at 13954 Trinity Blvd. in Ft. Worth, with a $1.6-million value; and VPSI LP’s 54,000-sf, 126-room, property at 3950 Airport Freeway in Irving, carrying a $2-million value.

Roddy says the alarming part of the freshly compiled list is the rise in property value of the roster. “It could be a barometer of things to come,” he says. In 1998, the average posted value was $300,000; this year, it’s a shade under $1.4 million. The count too has spiked with this year’s foreclosures coming in at 123 commercial properties in comparison to 73 last year. “That’s a change of 68%,” he points out. And that’s just in Dallas, Denton, Tarrant and Collin counties.

The consensus is that it’s not going to get any better in the coming months, particularly for hotel properties, say Roddy, Thomas Corcoran Jr. of Felcor Lodging Trust in Irving and Mark McDermott, a vice president of the hotel division of Colliers International’s Dallas office. But, they concur, it’s not all the fault of Sept. 11. Many properties were distressed before the fatal day and others belong to the over-leveraged crowd.

The times definitely are not a repeat of a decade ago when a hotel could be had for 25% of replacement value. “We’re not anywhere near those levels today,” Corcoran says. “I do think if the trend continues for bad occupancy, it’s going to put more higher leveraged loans in jeopardy.” More foreclosures will surely follow, but Corcoran says don’t look for fire sales.

Lenders today, the trio agrees, are far more amenable to loan renegotiation. It’s the right decision for the times while throwing up a roadblock for bottom-fishers, says McDermott. “The lenders obviously know that it may be worth it to renegotiate…instead of putting a property on a market that’s saturated,” he asserts.

Farmer knows about renegotiation. He’s been lobbying CoServ for months with regard to the cross-collateralized loans against the Beechwood property and was doing so when the luxury hotel opened its doors Oct. 2. “We didn’t think it would come to this,” he says.The golf course got in trouble last spring when flooding forced a 45-day shutdown and costly repairs. “That threw it behind and it’s never been in a position that it could catch up,” Farmer says. Meanwhile, the Westin Beechwood’s convention and meeting trade pro forma is higher than its projections. “We’re confident we’ll be able to work something out with the lender,” he says.

The glaring facts are that these aren’t the only properties in trouble. The 400-room Sheraton Park Central in Dallas is shuttered. The Wyndham Anatole supposedly temporarily closed a tower. The word is a franchise hotel in Plano also is headed into foreclosure. And, there’s the persistent street talk that the Adam’s Mark chain is being pressured by its lenders.

Adam’s Mark owner, HBE Corp. of St. Louis, says there have been several calls asking about a sale and troubled finances of the premier hotel chain. Financials are off limits since it’s privately held and an interview wasn’t possible yesterday. But, Fred S. Kummer III, Adam’s Mark executive vice president and COO, did issue a prepared statement to GlobeSt.com rendering a couched assurance that the chain is holding its own amid the shakeout. “Adam’s Mark, like the rest of the hospitality industry,” Kummer writes, “has been impacted by the economic downturn and the tragic events of Sept. 11…We are beginning to see gradual improvement in our business, although we realize that the recovery of the hospitality industry as a whole will be a gradual and ongoing process.

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