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� Continues negotiations on third mortgage
pool �
ATLANTA, Ga., July 2, 2009 � Lodgian, Inc. (NYSE Alternext US:LGN),
one of the nation�s largest independent hotel owners and operators, today
announced that the company has obtained extensions on $71.6 million of
its mortgage indebtedness previously scheduled to mature on July 1, 2009,
and remains in negotiations on extension of $45.7 million of mortgage debt
which matured on July 1, 2009. The mortgage indebtedness, which was
originated in June 2004 by Merrill Lynch and securitized in the collateralized
mortgage-backed securities market, has been divided into three pools of
indebtedness referred to by the company as the Merrill Lynch Fixed Rate
Pools #1, #3 and #4. (The company repaid the Merrill Lynch Fixed
Rate Pool #2 in 2007.) In summary, the company has reached agreements
with the special servicers of this mortgage indebtedness to provide the
following:
� An extension of the maturity date of the Merrill Lynch Fixed Rate
Pool #1 to July 1, 2010; and
� An extension of the maturity date of the Merrill Lynch Fixed Rate
Pool #4 to July 1, 2012.
Below are the principal balance for each of these loan pools, as of
July 1, 2009, as well as a listing of the hotels that serve as collateral
under these loan pools:
Merrill Lynch Fixed Rate Pool #1
Principal balance, as of July 1, 2009 - $36.5 million
Properties securing mortgage indebtedness:
Courtyard by Marriott Buckhead - Atlanta, GA
Marriott Denver Airport - Denver, CO
Holiday Inn � Strongsville, OH
Four Points by Sheraton � Philadelphia, PA
Merrill Lynch Fixed Rate Pool #3
Principal balance, as of July 1, 2009 - $45.7 million
Properties securing mortgage indebtedness:
Courtyard by Marriott � Bentonville, AR
Courtyard by Marriott � Florence, KY
Holiday Inn Inner Harbor � Baltimore, MD
Fairfield Inn by Marriott � Merrimack, NH
Courtyard by Marriott � Abilene, TX
Crowne Plaza � Houston, TX
Merrill Lynch Fixed Rate Pool #4
Principal Balance, as of July 1, 2009 - $35.1 million
Properties securing mortgage indebtedness:
Residence Inn by Marriott � Little Rock, AR
Crowne Plaza � West Palm Beach, FL
Courtyard by Marriott � Paducah, KY
Hilton � Columbia, MD
Holiday Inn � Myrtle Beach, SC
Wyndham DFW Airport � Irving, TX
�We are extremely pleased with the extension agreements reached with regard
to two of the three maturing loans, which extends the maturity date of
$36.5 million and $35.1 million of mortgage debt for one and three years,
respectively,� said Dan Ellis, Lodgian president and chief executive officer.
�These extensions give Lodgian additional time and flexibility as the company
continues its efforts to refinance this debt. We remain in negotiations
with the special servicer of the Merrill Lynch Fixed Rate Pool #3 in an
effort to arrive at a longer term solution for this loan portfolio.�
Extension of Merrill Lynch Fixed Rate Pool #1 to July 1, 2010
As of July 1, 2009, the principal amount of the Merrill Lynch Fixed
Rate Pool #1 (�Pool #1�) was $36.5 million. The company and the special
servicer for Pool #1 have agreed to two separate six-month extensions of
the maturity date for this indebtedness. Assuming that the second
six-month extension is exercised by the company, the maturity date of Pool
#1 will be July 1, 2010. The interest rate on Pool #1 will remain
fixed at 6.58% during the term of the extension. The company has
paid the special servicer an extension fee of approximately $183,000 and
will pay an additional extension fee of approximately $266,000 if the company
chooses to exercise the second six month extension. Additionally,
the company made a principal reduction payment of $2 million (reducing
the principal balance of Pool #1 to $36.5 million as of July 1, 2009),
and will make an additional $1 million principal reduction payment on or
before December 30, 2009 if it exercises the second six month extension.
The company also has agreed to make additional principal reduction payments
of approximately $83,000 per month during the first six month extension
and approximately $166,000 per month during the second six month extension,
if exercised.
Extension of Merrill Lynch Fixed Rate Pool #4 to July 1, 2012
As of July 1, 2009, the principal amount of the Merrill Lynch Fixed
Rate Pool #4 (�Pool #4�) was $35.1 million. The company and the special
servicer for Pool #4 have agreed to extend the maturity date to July 1,
2012. The interest rate on Pool #4 will remain fixed at 6.58%.
In connection with this agreement, the company paid an extension fee of
approximately $175,000 and made a principal reduction payment of $500,000.
The parties also have agreed to revise the allocated loan amounts for each
property serving as collateral for Pool #4 and to allow partial prepayments
of the indebtedness. Pursuant to this agreement, the company may
release individual assets from Pool #4 by paying the lender specified amounts
(in excess of the allocated loan amounts) in connection with a property
sale or refinancing. The company also agreed to pay the lender an
�exit fee� upon a full or partial repayment of the loan. The amount
of this fee will increase each year but, assuming the loan is held for
the full three year term, will effectively increase the current interest
rate by 100 basis points per annum. The company also has issued a
full recourse guaranty of Pool #4 in connection with this amendment.
Merrill Lynch Fixed Rate Pool #3
As of July 1, 2009, the principal amount of the Merrill Lynch Fixed
Rate Pool #3 (�Pool #3�) was $45.7 million. The company and the special
servicer are currently in negotiations concerning a long-term maturity
extension for Pool #3; however, no agreement has been reached and the company
can provide no assurances that the parties will reach such an agreement.
The failure to pay the principal balance due upon maturity is an event
of default, which gives the lender the right to institute foreclosure proceedings.
In the event that the company is unable to achieve a long-term extension
of Pool #3, the company expects that anticipated cash flow from the hotels
securing Pool #3 may not be sufficient to meet the related debt service
obligations and it may be necessary to transfer the properties securing
this indebtedness to the lender in satisfaction of the company�s obligations.
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| Holiday Inn Phoenix West
On May 6, 2009, the company announced that its efforts to sell the Holiday
Inn in Phoenix, Arizona have been unsuccessful and that the hotel�s operating
performance was continuing to decline. The company has concluded
that this hotel�s market value is less than the $9.4 million of mortgage
indebtedness (unrelated to the Merrill Lynch Fixed Rate Pool indebtedness
described above) which encumbers the property. Accordingly, the company
ceased making mortgage payments on this indebtedness in May 2009 and began
discussions with the lender to return the Holiday Inn property to the lender
on a consensual basis. These discussions are ongoing. On June
17, 2009, the company received notice from its lender that the mortgage
indebtedness on the 144 room Holiday Inn Phoenix West had been accelerated,
as anticipated. This mortgage indebtedness is non-recourse to the
company (except in certain limited circumstances which the company believes
do not apply in this case) and is not cross-collateralized with any of
the company�s other indebtedness. Since the company no longer intends
to sell this hotel, this property no longer meets the criteria for classification
as �held for sale.� As a result, the company will reclassify the
property to �held for use� in its second quarter 2009 financial statements. |
Holiday Inn - Phoenix West
1500 North 51st Avenue
Phoenix, Arizona
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About Lodgian
Lodgian is one of the nation�s largest independent hotel
owners and operators. The company currently owns and manages a portfolio
of 38 hotels with 7,079 rooms located in 22 states. Of the company�s
38-hotel portfolio, 18 are InterContinental Hotels Group brands (Crowne
Plaza, Holiday Inn, Holiday Inn Select and Holiday Inn Express), 12 are
Marriott brands (Marriott, Courtyard by Marriott, SpringHill Suites by
Marriott, Residence Inn by Marriott and Fairfield Inn by Marriott), two
are Hilton brands, and five are affiliated with other nationally recognized
franchisors including Starwood, Wyndham and Carlson. One hotel is
an independent, unbranded property, which is currently closed and held
for sale. For more information about Lodgian, visit the company's
website: www.lodgian.com.
Forward-Looking Statements
This press release contains forward-looking statements
within the meaning of the federal securities laws. All statements, other
than statements of historical facts, including, among others, statements
regarding Lodgian�s negotiations with special servicers and lenders, optional
maturity extensions, property dispositions, future financial position,
business strategy, projected performance and financing needs, are forward-looking
statements. Those statements include statements regarding the intent, belief
or current expectations of Lodgian and members of its management team,
as well as the assumptions on which such statements are based, and generally
are identified by the use of words such as �may,� �will,� �seeks,� �anticipates,�
�believes,� �estimates,� �expects,� �plans,� �intends,� �should� or similar
expressions. Forward-looking statements are not guarantees of future performance
and involve risks and uncertainties that actual results may differ materially
from those contemplated by such forward-looking statements. Many of these
factors are beyond the company�s ability to control or predict. Such factors
include, but are not limited to, the effects of regional, national and
international economic conditions, our ability to refinance or extend maturing
mortgage indebtedness, competitive conditions in the lodging industry and
increases in room supply, requirements of franchise agreements (including
the right of franchisors to immediately terminate their respective agreements
if we breach certain provisions), our ability to complete planned hotel
dispositions, the effects of unpredictable weather events such as hurricanes,
the financial condition of the airline industry and its impact on air travel,
the effect of self-insured claims in excess of our reserves and our ability
to obtain adequate insurance at reasonable rates, and other factors discussed
under Item IA (Risk Factors) in Lodgian�s Form 10-K for the year ended
December 31, 2008. We assume no duty to update these statements. Management
believes these forward-looking statements are reasonable; however, undue
reliance should not be placed on any forward-looking statements, which
are based on current expectations. All written and oral forward-looking
statements attributable to Lodgian or persons acting on its behalf are
qualified in their entirety by these cautionary statements. Further, forward-looking
statements speak only as of the date they are made, and the company undertakes
no obligation to update or revise forward-looking statements to reflect
changed assumptions, the occurrence of unanticipated events or changes
to future operating results over time unless otherwise required by law. |
