The owner of two hotels near the King of Prussia Mall is planning to hand them over to its lender before a $32.5M loan comes due in June.
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Buccini Pollin Group’s loan for the Fairfield Inn Philadelphia Valley Forge/King of Prussia and Crowne Plaza Philadelphia King of Prussia entered special servicing in December amid concerns of an “imminent default,” according to a report from Morningstar Credit.
“Borrower is cooperating with return of keys to Lender,” the financial services firm said in an April 7 update. “Counsels have been retained. ... Lender is reviewing viable options for next steps.”
In a statement, Buccini Pollin co-founder Dave Pollin said the company considered refinancing or extending the loan and selling the properties, according to the Philadelphia Business Journal, which first reported the news.
Ultimately, it decided to hand over the properties, Pollin said, citing turbulent capital markets and slow recovery of the King of Prussia lodging market.
“Hundreds of hotels, offices buildings, etc across the country have been returned to lenders due to the impact of covid, the slow recovery of certain markets, dramatically higher interest rates today and loan maturities that occur before assets have fully recovered,” Pollin said in a separate statement to Bisnow.
“This is an unfortunate cycle of the institutional commercial real estate landscape. We stay focused on the positive movement in the industry, such as the $130m+ in multifamily financing we’ve been able to secure this month.”
The two-hotel portfolio has a collective 306 rooms. Crowne Plaza, a full-service operation, has 206 keys, while the limited-service Fairfield Inn has 80.
The properties reported occupancy rates of 43% and 64%, respectively, in 2023. Revenue per available room was $59.80 for Crowne Plaza and $85.23 for the Fairfield Inn as of June 2024, according to the Morningstar report.
RevPAR for the Crowne Plaza was below the average of about $83 for King of Prussia’s hotel market last year, the PBJ reported.
Buccini Pollin sold off the Renaissance Philadelphia Downtown Hotel last month. The Center City hotel occupies a hulking tower across the street from the Independence Mall.
New owner Wankawala Organization is responsible for the more than $20M of debt tied to the 152-key property.
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