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Red Roof defaults on $361 million commercial loans |
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Red Roof Inns Inc, the discount hotel chain with nearly 350 properties, became the latest in the downtrodden hospitality industry to default on debt made during the credit-driven real estate boom, the company confirmed on Tuesday. |
Four Red Roof Inns loans totaling $361.4 million were 30 days delinquent in June, and have or will be handed over to a special servicer, which deals with troubled loans, said Frank Innaurato, a managing director at Realpoint, a credit rating company. The loans are secured by 131 locations, he said.
Hotels have been among the hardest hit assets in U.S. commercial real estate as the lingering recession causes consumers to pull back on travel.
Across the industry, falling occupancy last year resulted in a 23.2 percent drop in revenue per room at hotels that are collateral for commercial mortgage bonds, according to a recent Realpoint report.
What is more, frozen credit markets have limited refinancings on billions of dollars in commercial real estate debt, resulting in a wave of defaults and exacerbating the impact of the recession.
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Source - Reuters
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