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LAS COLINAS, TX-A report from the Dallas Morning News earlier this week regarding the Four Seasons Resort and Club Dallas’ ownership’s efforts to readjust debt with mortgage-holder CW Capital is signaling a trend in the hospitality industry. Experts tell GlobeSt.com that, as a result of the ongoing economic situation, more hotels will likely do the same thing over the next year.

The Morning News reported that Four Seasons’ owner BentleyForbes deliberately withheld the scheduled payment to the lender in October to attract its attention. The non-payment placed the loan with special servicer Manhattan Hospitality Advisors of Hermosa Beach, CA, which is working to restructure the loan that was issued when BentleyForbes acquired the asset at 4150 N. MacArthur Rd.

PKF vice president Randy McCaslin tells GlobeSt.com that Four Seasons hasn’t been the first to use the tactic of non-payment to try to bring a lender’s attention to a problem loan, nor will it be the last. What has surprised him, however, was that more of it hasn’t happened.

“RevPar is so far down nationwide, that for any hotel that is highly leveraged with debt, a substantial part of the bottom line won’t be able to make the debt payment,” he remarks. “So it will be up to the servicers, and the banks, to handle this.”

This is where BentleyForbes is right now. Manhattan Hospitality’s founder Jack Westergom tells GlobeSt.com the Four Season’s owner is in no financial distress and, in fact, completed $20 million worth of renovations in 2009 to add 34 new villas, a new family pool and a restaurant at the racquet club. This is on top of millions spent already in 2007.

Furthermore, a statement issued by BentlyForbes’ attorney Stephen Meister with Meister Seelig & Fein LLP points out that the owner is “attempting to execute on a plan that will enable the property to weather an already tough economic climate for the hospitality industry in general.” The statement indicates that arrangement of a multi-million dollar investment in the property is necessary to improve the property’s viability.

Though BentleyForbes isn’t in financial trouble, Westergom says “they’re hoping to position themselves for when we come out of the downturn next year, they’re taking steps to add a new level of service at the Four Seasons.” He goes on to say that a major issue with mortgages put together for hospitality owners, such as BentleyForbes, during the mid-2000s is these mortgages were based on financial assumptions which, these days, simply aren’t reality any more.

He points out that approximately 80% of loans made on hotels between 2004 and 2007 are in what he terms “technical default.” Westergom remarks, “In lieu of that, everyone is talking to a lender for relief in restructuring.”

McCaslin and Westergom believe that lenders would be willing to work with hotel owners for reasonable proposals that restructure the debt. “I don’t think the banks want to own these products,” McCaslin adds. “Unless these are bad properties without a lot of potential, the hope is that banks would try to work out an amiable solution.”

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