by Calculated Risk on 6/15/2009 10:56:00 AM

From Bloomberg: Extended Stay Hotels Chain Declares Bankruptcy in New York

Extended Stay Hotels ... which has more than 680 properties, said it had $7.1 billion in assets and $7.6 billion in debts at the end of last year. The company employs approximately 10,000 ...

Hotel occupancy is off more than 10% compared to last year - and revenue per available room off more than 20% - a very difficult operating environment, especially for hotel chains laden with debt.

Added: Some background from the WSJ :

Wachovia, Bear Stearns and others lent Lightstone founder David Lichtenstein $7.4 billion so he could buy the 684-hotel chain from Blackstone Group for $8 billion in April 2007. Mr. Lichtenstein, with help from Arbor Realty Trust, put in about $600 million. He estimated earnings were around $575 million, meaning the deal was levered at nearly 13 times -- high even for that era.

Much of the debt in the 2007 buyout of Extended Stay was converted into commercial mortgage-backed securities, or CMBS ...

The hotel chain has $4.1 billion in a senior first mortgage that was mostly sold to investors as CMBS. Behind those secured creditors is the $3.3 billion of mezzanine debt divided into 10 classes ranked one through 10 in seniority. Most of the holders of junior mezzanine debt bought at a discount, some around 60 cents on the dollar, but others as low as 10-15 cents, say debt holders. Both the senior and mezzanine loans mature June 12, with extension options.