Four Seasons in default

Millennium Partners this week acknowledged purposely defaulting on its two-year-old, $90-million CMBS loan for the 277-room Four Seasons San Francisco with hope of renegotiating the debt with the special servicer, LNR Property Corp., because the hotel, once valued at $135 million, is now worth less than is owed. The strategic move appears to be working for Millennium and others in California, which has industry experts expecting a lot more of it.

"What we are finding now is that--because on CMBS loans the companies cannot get any response from the master servicer--the only way of trying to renegotiate is to default because only a special servicer can modify the loan," Alan Reay, president of Irvine, CA-based Atlas Hospitality Group tells GlobeSt.com. "My prediction is you are going to see vast majority of CMBS loans in California--probably throughout country--defaulting." ...

"In order to commence discussions with the debt holders of the Four Seasons Hotel in San Francisco, Millennium Partners has strategically withheld payment of debt service," Millennium Partners said in a statement. "Conversations on restructuring the debt have begun, and Millennium Partners is hopeful that they will result in a positive outcome."

No word on whether they plan on defaulting on their latest project, the Millennium Tower at Mission and Fremont Streets

SOURCE: GLOBE ST