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Morgan Stanley May Restructure Hotel CMBS

NEW YORK CITY-The bank's MSREF V US fund seeks to restructure its $1-billion first mortgage on five former CNL properties, according to the Wall Street Journal.

By Paul Bubny | Updated on December 03, 2009

NEW YORK CITY-Morgan Stanley’s MSREF V US fund is attempting to restructure a $1-billion securitized mortgage on five of the eight resorts it bought in 2007 from CNL Hotels & Resorts, the Wall Street Journal reported Thursday. The properties were among $53 billion worth of commercial real estate the bank bought between 2005 and ’07, mostly through its Morgan Stanley Real Estate Funds unit.

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.

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