by Calculated Risk on 9/02/2009 03:01:00 PM

Remember all the half off sales? It is getting worse ...

From the WSJ: Hotel, 68% Off (ht James)

First Banks Inc. ... recently hired Atlas Hospitality Group to find buyers for the 179-room Lexington Plaza Waterfront Hotel. The asking price is nearly $19 million, just a third of the $58.4 million in debt, contractors' liens and unpaid taxes on the property.
...
The report from the property's court-appointed receiver in May, the latest available, pegged the hotel's occupancy at 25%.

Twenty five percent? Can they even afford to pay their utility bills?

And in Hawaii: Maui Prince Hotel Faces Foreclosure

Mortgage-holders led by Wells Fargo Bank sued last week to foreclose on the 310-room [Maui Prince Hotel], following the owners' failure to pay the resort's $192.5 million mortgage when it came due in July. The foreclosure threatens to wipe out the $227.5 million in mezzanine debt held by a UBS fund and the $250 million in equity that Morgan Stanley and its partners put into the property.

When the occupancy rates fall far enough, forget about paying the debt - worry about meeting payroll. A quote from the article:

"We do not have funding for payroll, but we are getting some funding for our accounts payable and basic operating expenses," said Donn Takahashi, president of Prince Resorts Hawaii ... "We cannot operate a top-notch resort in this fashion."

I suspect we will see many more stories like these two.