Wednesday, June 24, 2009

Red Roof Inn Defaults

Accor (owner of Motel 6) sold RRI for $1.3 billion back in 2007 to Citigroup's Global Special Situations Group (GSSG), Westmont Hospitality Group ("Westmont"), and Westbridge Hospitality Fund, and partially financed that with 2 pari passu loans spread across 4 CMBS deals totaling $366 million. The rest of the senior mortgage ($655mm) didn't make it into a CMBS, and is likely on Citi or Bear's books, but it's not clear, and there is also some mezz debt ($164mm). That put's the new owners' equity at about 8 or 9 % of the purchase price. See the WSJ article for more.

The CMBS loans:
CGM RRI Hotel Portfolio - CD 2007-CD5 and CGCMT 2008-C7, 52 properties, $103mm

RRI Hotel Portfolio - BSCMS 2007-PW17 and BSCMS 2007-PW18, 79 properties, $263mm

UPDATE: Corrected the ownership structure.


Anonymous said...

Good. Too much debt, too many high salaries and too much top management. Red Roof Inns was meant to be a clean comfortable lodging facility with a low price so that high occupancy and profits would be achieved. looks like to Wall Street guys at Citi got screwed by the FRENCH (Accor) again. Wake up America, quit dealing with foreigners.

Concrete Jungle said...

Your comment is a little confusing. It sounds like you're saying the French company, Accor, did a great job running the hotel and then it all went to pot when the "Wall Street guys" took over. Then you tell the Americans who you blame for messing up the business to stop dealing with the people who you state did a great job?

That's really bizarre. I also find it pretty close minded when people make statements like "quit dealing with foreigners". I really don't want to be a part of your close-minded world. Trade is what has always made the word go round. Isolationist attitudes are a non-starter.