Having seen an overdose of pricey stuff on shelves, I almost believed luxury is immune to the global phenomenon of recession. But the story of Four Seasons Hotel, San Francisco begs to differ. Millennium Partners have intentionally defaulted in the payment of their two-year old $90-million CMBS loan. This was done so as to convince the lenders for restructuring of the debt with LNR Property Corp. With the economic meltdown, property prices have slashed and in case of Four Seasons, its value is less than its debt. Experts from the industry suggest that many will be defaulting in CMBS loan payments, as borrowers face similar situation as that of Four Seasons.

Another reason is the downfall in occupancy and resulting losses for such luxury hotels. Many hotels in California have been following the “default of convenience” strategy and thereby making use of special servicing. Well, the forces of depression were triggered in US and then eventually affected the whole world, so this wasn’t unexpected.

Via Luxist