Cerberus Capital Management and Highgate missed two months of payments on a $415 million loan for 30 Courtyard by Marriott hotels, another sign of
Cerberus and Highgate have requested an extension of the floating-rate loan, which matured in July, according to a servicer report.
"Borrower stated that they do not have enough funds to cover the shortage and the regular monthly debt service," according to the report.
More commercial-property loans have become delinquent as
The delinquent Courtyard portfolio was facing a higher insurance payment following Hurricane Ian and Tropical Storm Nicole, which struck the US last year, according to the report. Property insurance prices in the US increased by 17% in the first quarter, according to data from Marsh McLennan.
"The default of the Courtyard by Marriott portfolio took us by surprise," Barclays Plc analysts Lea Overby and Anuj Jain wrote in a note Monday. "This shortage is due to a large hurricane insurance payment, although only three of the 30 are are located in Florida."
Representatives of Cerberus and Highgate didn't reply to emails seeking comment.
While lodging demand has enjoyed a robust recovery from Covid lows, hotel owners are facing the same financing challenges as the rest of the commercial real estate industry. In addition to higher borrowing costs, hotel owners delayed renovations during the early part of the pandemic, and the bills for deferred maintenance are coming.
Earlier this month, Ashford Hospitality Trust said it would probably
Analysts at DBRS Morningstar downgraded their rating outlook to "negative" on part of the Courtyard by Marriott hotels debt last week. Its appraisal of the real estate declined to $331.5 million based on cash flow at the end of 2022 from $675 million in 2018, according to the July 18th
Colony Capital, now called DigitalBridge Group Inc.,
The loan, which was originally issued in 2018 to Colony, is eligible for two additional one-year extensions through July 9, 2025, according to loan documents.