Lodgian Inc. said Friday that a mortgage secured by six of its hotels is in default and that the real estate investment trust is talking to lenders about a loan extension and modification.
The company also said that it has stopped paying debt secured by a Massachusetts property, and that it plans to give the property, the Crowne Plaza in Worcester, to the lender.
Other properties could have the same fate as Lodgian continues to review its 37-hotel portfolio.
The woes hitting the hotel owner and operator are the latest sign of the troubles impacting the hospitality industry. Revenue per available room is tumbling as hotels try to stem falling occupancy rates with lower rates. Meanwhile, companies are having trouble keeping up with debt obligations taken on during a much stronger operating period earlier this decade.
Lodgian said that if an agreement cannot be reached on the $45.6 million loan backed by the six other properties, those hotels will also be given to lenders. The company said cash flow from the properties is "insufficient" to meet debt obligations. For the past year, the properties had operating income of $2.1 million, while debt costs were $4 million.
Lodgian swung to a second-quarter loss amid slumping revenue.
