Landmark Hotel Goes to Special Servicing

SAN DIEGO-Some $260 million of nearly $630 million in debt that encumbers the landmark Hotel del Coronado has been placed in special servicing as upscale and luxury hotels continue to suffer from the economic downturn. The placing of the debt with special servicer LNR Partners is not likely to lead to foreclosure, analysts say, but it raises a number of possibilities as the debt heads for a January maturity.

“I don’t think there’s a big likelihood of seeing this as a foreclosure,” says Alan Reay, founder and president of Irvine, CA-based Atlas Hospitality Group. However, Reay says that the $260 million that has been placed with the special servicer, which is CMBS debt, could be “in play” if LNR so chooses.