ATLANTA, GA—Lodgian, Inc. (NYSE Alternext US:LGN), one of the nation’s largest independent hotel owners and operators,reported that it is developing a strategic plan to strengthen the company’s balance sheet and better position the company for the near- and intermediate-term. In conjunction with this plan, the company is conducting an analysis of its operating portfolio. Results of the review to date are as follows:
· The Merrill Lynch Fixed Rate Pool 3, secured by six hotels, is in default. The loan matured on October 1, 2009. The company has engaged in negotiations with the lender regarding extension and modification of the loan, with no resolution to date. Unless some agreement is reached in the near-term, the company intends to return the hotels to the lender in full satisfaction of the debt;
· The company has stopped servicing the debt secured by the Crowne Plaza in Worcester, Mass., and intends to return the hotel to the lender in full satisfaction of the debt; and
· The company continues its cost reduction initiatives.
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Unless otherwise stated, debt balances and trailing twelve month figures in this press release are as of August 31, 2009.
“We continue to focus on strengthening our balance sheet by extending maturities for certain debt facilities and pursuing options with respect to overleveraged assets,” said
Dan Ellis, Lodgian president and chief executive officer.
“Year-to-date, we have extended $71.6 million of the Merrill Lynch mortgage debt that matured on July 1, 2009. We remain committed to reducing administrative and operating costs to improve the operating performance of the company as a whole. Further, we continue our review of the portfolio which may result in additional assets being returned to lenders.”
Merrill Lynch Fixed Rate Pool 3
The Merrill Lynch Fixed Rate Pool 3, with a principal balance of $45.6 million, matured on October 1, 2009.
This loan bears interest at a fixed rate of 6.58%, is secured by six hotels, and is non-recourse to the company. Cash flow from the hotels securing this pool is insufficient to meet the related debt service obligations.
The trailing twelve month aggregate Net Operating Income (“NOI”) for the underlying properties was $2.4 million, while annual debt service is approximately $4.0 million.
The company has been in discussions with the lender regarding extension and modification of the loan; however, no agreement has been reached at this time. The loan is now in default and the lender may accelerate repayment of the loan and begin foreclosure proceedings, although it has not yet done so. If no agreement is reached, the company intends to return the hotels to the lender in full satisfaction of the debt.
Crowne Plaza Worcester
On a trailing twelve month basis, the cash flow from the Crowne Plaza in Worcester was not sufficient to service the debt on the property. As a result, the company did not make the required debt service payment on September 11, 2009. The company is now in default on this loan, and the lender may accelerate repayment of the loan.
The hotel is encumbered by a $16.3 million, fixed-rate CMBS mortgage that bears interest at 6.04%. The mortgage matures in February 2011, and is non-recourse to the company. Annual debt service on the mortgage is approximately $1.3 million, while the trailing twelve month NOI for the property was $0.6 million. The company does not expect further negotiation with the special servicer and intends to convey the hotel to the lender in lieu of repayment.
For a complete copy of the company's news release and further information, please contact:
Debi Neary Ethridge, Vice President, Finance & Investor Relations, dethridge@lodgian.com, (404) 365-2719
