The Los Angeles Airport Marriott, a hotel situated near the Los Angeles International Airport, has encountered financial turbulence as its $130.1 million commercial mortgage-backed securities (CMBS) loan is placed under scrutiny. The hotel loan has been flagged by its servicer due to a decline in debt service coverage ratio, signaling potential challenges ahead for the property’s financial health, Commercial Observer reported citing data from Trepp.
The drop in debt service coverage ratio is attributed primarily to escalating operating and capital costs, coupled with increased departmental room expenses and food and beverage costs. This development comes shortly after the hotel loan required modification to rectify delinquency issues in 2022, following a period of over a year and a half. Ladder Capital spearheaded the financing for the hotel, originating in 2017.
Built in 1972, the property is located at 5855 W Century Blvd. and features 1,004 hotel rooms. The property was acquired in December 2014 by XLD Group, a U.S. subsidiary of China-based Sichuan Xinglida Group Enterprises, for $135.4 million.
Despite its previous valuation of $300.8 million, the hotel’s appraised value plummeted to $182 million in April 2021, representing a significant decline of nearly 40 percent, as noted in the report.
The placement of the Los Angeles Airport Marriott’s loan on the servicer’s watchlist underscores the challenges facing the property amidst rising costs and valuation depreciation. With uncertainties looming over its financial stability, stakeholders will be closely monitoring the hotel’s performance and management strategies to navigate the hospitality industry.
As the Los Angeles Airport Marriott grapples with financial strain and loan scrutiny, the situation highlights broader challenges faced by the hospitality sector in the current economic landscape. Across the state, there has been a decline in hotel investment. According to Atlas Hospitality Group’s Year-End Hotel Sales Survey from 2023, Los Angeles County saw a 55 percent decrease in sales transactions, with a total dollar volume decline of over 35 percent. Despite this, the average sales price per room saw a five percent increase, albeit with a 17.6 percent drop in median price per room.
