Wall Street Journal

At the market's peak two years ago, MSREF V put $1.52 billion of debt on the five resorts, including a $525-million mezzanine loan and a $1- billion first mortgage that took the form of CMBS. Since then, the hospitality sector has taken a beating, and cash flow for the five properties declined from $150 million in the second of '07 to $84 million in the first six months of this year, the Journal reported, citing data from Realpoint LLC.

The Journal reported that the CMBS loan was transferred to special servicing last month, citing a report from servicer Midland Loan Services that said the loan faced "imminent default." The mortgage is slated to come due in February 2011, but MSREF is seeking an extension, according to the Journal.

The five resorts include the Grand Wailea Resort Hotel & Spa in Maui; the La Quinta Resort & Club and PGA West in La Quinta, CA.; the Arizona Biltmore Resort & Spa in Phoenix; the Doral Golf Resort & Spa in Miami; and the Claremont Resort & Spa in Berkeley, CA. Coinciding with the Journal report, Fitch Ratings said the hospitality sector's outlook remains cloudy for next year.