Owners of two Bay Area Hiltons may be attempting to modify their loans rather than give up their distressed properties.
Recent special servicer notes on the Hilton San Francisco Financial District at 750 Kearny Street show that owner Portsmouth Square is working with lenders on a 12-month extension for $86 million in CMBS loans on the 543-room hotel that defaulted at maturity in January, according to analytics firm Trepp.
There’s not much information available about how the borrower is attempting to get the extension, though servicer comments note the loan is now managed on a hard cash basis.
Jennifer Spillane at Trepp said that a loan paydown or some other form of capital contribution from the borrower, a subsidiary of L.A.-based The Intergroup Corporation, may be required as part of the modification.
She called the one-year extension “a bit brief” but said in several modifications recently there have been additional extension options negotiated into the modification, if the loan hits certain performance standards. She also noted that there is $20 million in mezzanine debt on the property, and thus far there’s no information on how that would factor into any prospective modification.
Another Bay Area Hilton, the 165-key Hilton Garden Inn Cupertino, is in imminent monetary default on its $32 million CMBS debt, according to credit rating agency Morningstar. But that doesn’t mean that owner Cupertino Hospitality Associates is handing over the keys, according to Morningstar’s David Putro.
Cupertino Hospitality may be trying to figure out an extension or modification, he said, since the most recent debt service coverage ratio on the property is an adequate 1.27 and the loan doesn’t mature until the end of the year.
“This may be a move by the borrower to get ahead of the maturity in December,” he said, adding that the loan
0