It's happened again, another luxury hotel is in default. Millennium Partners has said that it has defaulted on a two-year-old, $90-million CMBS loan for the Four Seasons San Francisco
. Like other hotel owners, Millennium made this move as a bargaining tool with an eye toward renegotiating the debt with the special servicer, LNR Property Corp., because the value of the hotel is lower than the debt. Alan Reay, president of Irvine, CA-based Atlas Hospitality Group told GlobeSt.com
. "My prediction is you are going to see vast majority of CMBS loans in California--probably throughout country--defaulting."
We've already seen another California hotel, the W Hotel in San Diego
in a similar situation. Loans made over the past two years were made at the peak of the market. Now with real estate prices and hotel occupancy rates in sharp decline, borrowers want relief. The Four Seasons San Francisco remains open and is offering a package that offers a free third night if you stay two consecutive nights.