- Obtains extensions until 2010 and 2012 on two mortgage pools - -
Continues negotiations on third mortgage pool - - Provides update
on Holiday Inn Phoenix West property - ATLANTA, July 2
/PRNewswire-FirstCall/ -- 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. A schedule of 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, is attached
as an exhibit to this press release. "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. 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 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. 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: http://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.
Exhibit 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 Contact: Debi
Ethridge Vice President, Finance & Investor Relations (404)
365-2719 DATASOURCE: Lodgian, Inc. CONTACT: Debi Ethridge, Vice
President, Finance & Investor Relations, +1-404-365-2719, Web
Site: http://www.lodgian.com/
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