Lodgian Updates on Default on Holiday Inn Inner Harbor Loan
From the company's Q3 Report:
As previously disclosed, the Merrill Lynch Fixed Rate Pool 3 securitized mortgage debt, with a principal balance of $45.5 million, matured on October 1, 2009 and is now in default. The company had been in discussions with the special servicer regarding extension and modification of the loan; however, no agreement has been reached at this time. The company is now in discussions with the special servicer regarding returning the six hotels to the lender in full satisfaction of the debt. This mortgage indebtedness is non-recourse to the company except in certain limited circumstances, which the company believes do not apply in this case, and is not cross-collateralized with any of the company's other indebtedness.
From the company's 10-Q filed yesterday:
The Company recorded fair value measurement losses of $32.3 million during the nine months ended September 30, 2009, to reflect the current fair market value of certain held for use assets which the Company expects to surrender to the lenders in full satisfaction of the related debt obligations. The Company's estimate of the fair value of an asset is based on a number of factors, including the opinions of third-party brokers or appraisers or internally derived values (Level 3 inputs). While management may consider one or more opinions or appraisals in arriving at an asset's estimated fair value, the estimate is ultimately based on management's determination, and management remains responsible for the impact of the estimate on the financial statements. The adjustments included the following (amounts below are individually rounded):
- $17.1 million on the Holiday Inn Inner Harbor, MD;
- $5.2 million on the Crowne Plaza Houston, TX;
- $4.5 million on the Crowne Plaza Worcester, MD;
- $2.5 million on the Fairfield Inn Merrimack, NH;
- $1.6 million on the Courtyard by Marriott Bentonville, AR;
- $1.2 million on the Courtyard by Marriott Florence, KY; and
- $0.1 million on the Courtyard by Marriott Abilene, TX.
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