Cerberus, Highgate Miss Mortgage Payments On 30-Hotel Portfolio

Cerberus Capital Management and Highgate have missed two mortgage payments on a $415M loan associated with 30 Courtyard by Marriott properties, Bloomberg reports, citing a servicer report.

One important factor in the delinquency of the Marriott hotel properties, according to the loan servicer, was higher insurance costs in the wake of Hurricane Ian and Tropical Storm Nicole, which struck last year.

Based on cash flows, DBRS Morningstar's appraisal of the Marriott portfolio declined to $331.5M from $675M in 2018, Bloomberg reports, citing an analyst's note.

The borrowers have asked for an extension on the floating-rate loan, which matured this month. It isn't clear whether they will receive such an extension, though regulators of the U.S. banking system are pressing lenders to cut borrowers some slack, at least for now.

CRE is facing almost $400B of loan maturities this year, and delinquencies are on the rise. Regulators suggest that lenders accept partial payments, deferred payments or provide other assistance.

Much of the distressed debt is in the office sector, which has never really recovered from the pandemic and has $1.5T worth of debt coming due in the next three years.

But other property sectors aren't immune, and hospitality is one of the more troubled asset types. 

Earlier in July, Ashford Hospitality Trust, which missed a repayment deadline, said 19 hotels that are part of a $982M mortgage pool will probably be turned over to their lenders.

Last month, Virginia-based Park Hotels & Resorts handed back the keys to two of San Francisco's largest hotel properties, ceasing payments on $725M worth of securitized loans tied to the hotels.