Another Extension for $190M Loan on Renaissance Mayflower Hotel

The $190 million loan on the Renaissance Mayflower Hotel at 1127 Connecticut Avenue NW in Washington, D.C. has been granted a second loan modification, according to Trepp, which cites special servicer data.

The loan on the hotel was first transferred to a special servicer in 2009 and subsequently modified. The first modification pushed the loan out two years from March 2012. The loan was transferred to a special servicer again in June 2013 due to “imminent default.”

The latest modification is a 30-month extension with an option for another 12 months. The extension of the loan allows the borrower time to rennovate and stabilize the hotel, the servicer reports.

As part of the extension, the borrower has paid the lender $3.5 million, which reduced the outstanding original principal balance on the asset to $186.5 million.

Securitized in 2007, the loan on the 657-room, full-service hotel was based on a $285 million appraised value. That appraisal was developed based on a debt service coverage ratio (DSCR) of 1.48x, which was higher than the “as-is” DSCR of 0.95x, according to Trepp.

“The property struggled to generate enough cash to pay debt service on the loan from the start,” Trepp reports. “The DSCR was 0.66x in 2008 and 0.77x in 2009–a slight nudge up. Only marginal gains were made in more recent years, as the DSCR moved up incrementally to 0.62x in 2012 and 0.82x in 2013.

The Renaissance Mayflower borrower was WSRH Washington, L.L.C. The loan sponsor, Rockwood Capital, used the loan to acquire the property for approximately $262.5 million (inclusive of closing costs) on February 6, 2007. The property was to be held by a subsidiary of Rockwood Capital Real Estate Partners Fund VII, LP.

When it was acquired, the property had benefited from a capital infusion of approximately $21.6 million ($32,877 per key). In 2004, Walton Street Capital, LLC, the previous owner, expended approximately $10 million on capital improvements ($15,221 per key), which included the replacement of soft goods and most case goods. In addition to the 2004 capital infusion, the previous owner completed an additional renovation program totaling approximately $11.6 million ($17,718 per key), which included upgrades to the lobby and front desk, ballrooms, and the breakout rooms.

The food and beverage outlets were also reengineered, including Cafe Promenade, the main eatery, and the Lobby Court Bar which was converted into an upscale wine bar. In addition, the fitness center was relocated from the basement level to the mezzanine level. Other items that were refurbished included the roof, modernization of elevators, a new telephone switch system and the installation of a new fire alarm system.