Cerberus Capital Management and Highgate missed two months of payments on a $415 million loan for 30 Courtyard by Marriott properties.
Cerberus, an alternative investment firm, and Highgate — a hotel management, investment, technology and development firm — both requested an extension of the floating-rate loan after indicating that they don’t have the funds to pay for the months they missed and the monthly debt service. The Courtyard portfolio’s insurance rate increased after Hurricane Ian and Tropical Storm Nicole hit the U.S. last year.
“The default of the Courtyard by Marriott portfolio took us by surprise,” Barclays Plc analysts Lea Overby and Anuj Jain wrote in a note Monday. “This shortage is due to a large hurricane insurance payment, although only three of the 30 are … located in Florida.”
This adds to a growing list of investment companies failing to pay off loans in the hospitality industry. Ashford Hospitality Trust announced its plans to turn in the keys of 19 hotels due to $255 million in paydowns required to extend loan terms. Also, Park Hotels & Resorts terminated the payments toward a $725 million non-recourse loan set to mature in November for two San Francisco hotels.
Cerberus and Highgate acquired the portfolio from what was formerly Colony Capital in 2021. The loan is eligible for two additional one-year extensions through July 9, 2025.