Four Seasons San Francisco in default - San Francisco Business Times:

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The luxury condo and hotel developer and operator has purposefully stopped making debt paymenta as a strategy to jump start renegotiating the debt with thespecial server, The Four Seasons is the second luxur hotel to default on its debt payments in recentf weeks. The owners of the 393-room Renaissance Stanforcd Court Hotel in Nob funds controlledby , defaulted on a $89 milliojn loan, according to lender . In a statement Millennium Partners said ithas “strategically withheld paymenty of debt service. Conversations on restructurinv the debt have begun and Millennium Partners is hopefull that they will result in apositiver outcome.
” “(Millennium’s) request for restructurinfg is consistent with similadr actions being taken by hotel owners nationwides in response to curren economic conditions,” said the statement. “As has been true since its foundingin 1991, the company continue to meet its financial obligations on its other holdings throughout the country.” Millennium said the action pertainds only to the debt on the San Francisco Four Seasons Hotel property, whichn is owned independently of all other Millenniumm properties, including the Millennium Tower at 301 Missionh St.
Alan Reay, presidenft of Irvine-based , called the Four Seasons San Francisco actiona “default of convenience” and said it was the only way for Millennium Partners to force the special server on the loan to enter He said the more deluxee a hotel, the more likelyt it is to be hurt by the recession, becausw the costs of operating a true full-service hotel are not easy to pare down. “Tpo see the caliber of hotel like Renaissance Stanford Court and the Four Seasons goinhg into default in the early stages of this downturbn is not agood sign,” said “It means this is goinfg to be deep, it’s going to be and this is going to effecty everybody.
” In the last 60 days 213 hotel owneras have defaulted on their loan s in California, a 184 percent jump over the previoud 60 days, Reay said. Reay predicted that the vast majoritgy of hotels that were financed with loanx that tapped thecommercial mortgage-backed securities markety between 2005 and 2007 will end up in a number that could top 2,000 in Californiwa alone. “We’re in a deep recession and hotels are sufferin g the most of any real estate classrighgt now,” said Reay. A report by Atlas Hospitality estimates that room revenuee in California aredown 21.
5 percent in 2009 and that valuez are 50 to 80 percent lower than they were at the market’s peak from 2005 to 2007.