Largest Distressed US Hotel Portfolio Goes to Auction
Distressed hotel assets have been hard to find as lenders have been willing to extend forbearance.
As part of its Chapter 11 bankruptcy proceedings, Singapore-listed Eagle Hospitality Trust is placing what is one of the largest portfolios of distressed US hospitality assets on the market via a stalking-horse auction that will be held on May 20th. The price floor is $470 million.
If a better offer is not received in the auction, the stalking-horse bidder—Madison Phoenix LLC, an affiliate of Monarch Alternative Capital LP—will purchase the 15 properties for $470 million.
The properties in the portfolio include Doubletree by Hilton Salt Lake City Airport, Hilton Atlanta Northeast, Sheraton Denver Tech Center, Holiday Inn Resort Orlando Suites-Waterpark, Embassy Suites by Hilton Anaheim North, Holiday Inn Denver East-Stapleton, Renaissance Denver Stapleton, Four Points by Sheraton San Jose Airport, Holiday Inn Hotel & Suites Anaheim, Holiday Inn Hotel & Suites San Mateo, Sheraton Pasadena, Crowne Plaza Danbury, Embassy Suites by Hilton Palm Desert, Queen Mary Long Beach and Westin Sacramento.
“We are offering one of the largest portfolios of distressed assets in the market at this time,” Alan Tantleff, leader of FTI’s Lodging Gaming and Leisure industry practice, tells GlobeSt.com. Tantleff was appointed to the interim role of Chief Restructuring Officer to assist the REIT as it navigates the complexities of restructuring and bankruptcy.
The auction is attracting significant attention, he adds. “Many investors are confident in hospitality’s recovery and they are looking for distressed assets in this space.”
Indeed, distress assets have been hard to find for many investors, particularly in the hotel sector as lenders, recognizing that its problems are likely to end when the recovery starts, have been willing to extend forbearance.
As for Eagle Hospitality Trust, the auction is an important step for it to return money to stakeholders, Tantleff says. The company has been challenged by a number of factors including a structure in which a tenant defaulted, allegations of mismanagement and fraud and the problems presented by Covid.”