BETHESDA, MD-The lender of a $140-million mortgage for the Hyatt Regency Bethesda postponed the auction of the property on Friday in the hopes of coming to an agreement over a workout with the former owner, the Meridian Group, according to the Washington Post.
The postponement bodes well for the lender at least, which stood to take a bath on the auction even if the best-case scenario materialized. In short, the numbers behind this loan illustrate a deal that closed at a price point that the market will simply not support today. One close comp to the Hyatt Regency Bethesda is the nearby Doubletree, which traded at roughly $265,000 per key several months ago. Even if the Hyatt Regency Bethesda could fetch $300,000 per key at the auction, it would still come in under the note of $140 million.
On the other hand, suggests Tom Baker, principal of Humboldt Hospitality Advisors, “if the existing borrower can show the lenders a plan in which, let’s say, 10 years from now they will get their $140 million back then the lender doesn’t have to take a loss.” Baker speculates that the lender is confident, or at least hopeful, of reaching an agreement with the borrowers. “And if they don’t, of course, they can always start the auction process again,” he tells GlobeSt.com.
Another hotel property going to auction later this month is the St. Regis Hotel at 923 16th St., NW. The lender, Barclays Capital Real Estate, scheduled a foreclosure sale of the property for September 24 for its $101.6-million note. That property traded at the height of the market. Whether the lender will recoup its loan--either from the borrower or the market--is very much an open question.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
