A $62 million loan on the Westin – Falls Church Hotel in Falls Church, VA has been transferred to a special servicer due to imminent default, according to Fitch, which reports that the borrower has requested a loan modification.
The performance of The Westin Falls Church, a 405-key, full service hotel, has continued to decline due to weakening demand from federal contractors and government employees, according to servicer notes on the asset provided by Trepp.
As of December 2013, net operating income (NOI) for the hotel had declined 18 percent from the end of 2012 and remained 39 percent below underwritten NOI at the loan’s issuance, according to Fitch. And the property’s debt service coverage ratio dropped to 0.76x in in 2013 after posting a DSCR of 1.22x in 2012, according to Trepp.
The property has also underperformed its competitive set, as evidenced by penetration rates reported by Smith Travel Research. The property was ranked the No. 4 hotel with respect to RevPAR.
Fitch also reports that management has marketed the hotel to alternative business channels to secure additional accounts and appointed a new general manager earlier this year with prior experience in the market.
The loan, which had a 5.510 percent mortgage rate, is current through June and matures in October 2015. The loan’s sponsor was James A. Procaccianti. The property is still listed on the website of The Procaccianti Group, or TPG Hospitality, which operates under the leadership of James Procaccianti.