Red Roof defaulted on $361 million loans
Although we often concentrate on the failures in the high end hotels business, such as the recent demise of the W, San Diego, the pain in the hotel sector is not exclusive to the upper echelons.
Recently, Red Roof Inns Inc., the hotel company acquired in a Citigroup-led buyout for $1.3 billion two years ago, defaulted on four loans totaling $361.4 million, according to credit rating company Realpoint LLC. The debt is now 30 days delinquent, and includes a $181.75 million loan and others valued at $76.6 million, $67.6 million and $34.4 million, said Frank Innaurato, managing director of CMBS analytical services at Realpoint. The collateral includes 113 Red Roof locations.
“Due to the current state of the lodging industry, Red Roof Inns Inc. has entered into discussions with its lenders in order to refinance the debt related to the acquisition of the real estate assets of the company,” Red Roof said in an e- mailed statement. “While the company is profitable on an operating basis, Red Roof believes that a debt modification is the best way for the company to manage through the current downturn and position itself for future growth.”
