NEW YORK CITY-Morgan Stanley’s MSREF V US fund is attempting to restructure a $1-billion securitized mortgage on five of the eight resorts it bought in 2007 from CNL Hotels & Resorts, the Wall Street Journal reported Thursday. The properties were among $53 billion worth of commercial real estate the bank bought between 2005 and ’07, mostly through its Morgan Stanley Real Estate Funds unit.

At the market’s peak two years ago, MSREF V put $1.52 billion of debt on the five resorts, including a $525-million mezzanine loan and a $1- billion first mortgage that took the form of CMBS. Since then, the hospitality sector has taken a beating, and cash flow for the five properties declined from $150 million in the second of ’07 to $84 million in the first six months of this year, the Journal reported, citing data from Realpoint LLC.

The Journal reported that the CMBS loan was transferred to special servicing last month, citing a report from servicer Midland Loan Services that said the loan faced “imminent default.” The mortgage is slated to come due in February 2011, but MSREF is seeking an extension, according to the Journal.

The five resorts include the Grand Wailea Resort Hotel & Spa in Maui; the La Quinta Resort & Club and PGA West in La Quinta, CA.; the Arizona Biltmore Resort & Spa in Phoenix; the Doral Golf Resort & Spa in Miami; and the Claremont Resort & Spa in Berkeley, CA. Coinciding with the Journal report, Fitch Ratings said the hospitality sector’s outlook remains cloudy for next year.

A Morgan Stanley spokeswoman declined to comment on the Journal article. To access the complete article, click here.

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