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A Faneuil Hall hotel owned by Blackstone is reportedly heading for foreclosure after negotiation attempts around its delinquent $274M loan failed.
A CMBS loan backed by the 178-room Club Quarters Boston hotel and three other Blackstone-owned CQ hotels in Chicago, San Francisco and Philadelphia has been in special servicing with CWCapital since mid-2020, and the special servicer is now "pursuing foreclosure," the Boston Business Journal reported, citing a CMBS industry report.
Bisnow also received a report from Trepp saying the special servicer is pursuing foreclosure. A Blackstone spokesperson declined to comment to Bisnow.
The loan was originated by Bank of America in 2017 and has been delinquent for 34 months, BBJ reported. In 2022, Blackstone wanted to potentially walk away from the assets by paying the properties' $61.3M in mezzanine debt, CoStar reported.
Blackstone purchased the four-hotel portfolio in 2016 for $283M. The entire portfolio was last appraised in October at about $360M, the BBJ reported, down from its 2017 value of $422.5M.
Special servicers like CWCapital are used as an intermediary between borrowers and lenders to help negotiate terms on a loan. A loan can go into special servicing for a number of reasons, but the most common is when a borrower is delinquent on payments.
In April, the national special servicing rate saw the largest month-over-month increase since August 2020. Earlier in the pandemic, hotel and retail assets saw the highest rates of delinquencies, with about 25% of all hotel-backed CMBS loans in special servicing in October 2020, but in recent months, office assets have faced more distress.
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