In the latest sign of distress in the hotel market, the Westin Book Cadillac in downtown Detroit is now underwater on its commercial mortgage-backed debt totaling $ 77 million.

Trepp LLC, which tracks CMBS debt, says the appraised value of the 453-room hotel has dropped dramatically from $ 136 million at the end of last year to $ 74.6 million in September. , slightly less than the outstanding balance of a pair of CMBS loans taken out by its owner. earlier this year, around the time the COVID-19 pandemic was making its way through the United States – one for $ 45 million and another for $ 32 million.

The New York-based company says the debt is not paid until May.

An email was sent to John Ferchill, director of the Cleveland-based Ferchill Group, owner of the hotel he remodeled in 2008 at a cost of $ 180 million.

The building opened in 1924 as the Book-Cadillac Hotel and had been vacant and in disrepair for more than two decades before the redevelopment, one of many large-scale projects that helped start a wave of building rehabilitation in the city center.

It’s one of the best-known hotels in the area, but it closed much of the spring during the pandemic, which has crushed the hospitality industry.

The Townsend Hotel in Birmingham city center is also behind on a $ 35 million ready.

In addition, some hotel construction projects have been delayed. Many industry watchers say so may not recover at pre-pandemic levels through 2023 or 2024.

The most recent data from STR, a hotel industry analysis company headquartered in North America in Tennessee, shows hotels in the area have an occupancy rate of just 36.1% , a decrease of 42% from one year to the next. Additionally, average daily rates fell to $ 72.28, down 28.6% year-over-year, while RevPAR – the industry short for revenue per available room, a key financial measure – fell 58.6% to $ 26.11.

Still, all of these are improvements from market lows in April. Occupancy was only 22.9% the week of April 4; the week of April 25, daily rates were $ 63.38 and RevPAR plunged to $ 14.88 the week of April 4.

Trepp says that between January and April of this year, revenues were $ 19.76 million and expenses were $ 21.78 million, creating a shortfall of more than $ 2 million in those months alone. . More recent hotel financial data was not available.

But net operating income for the previous three years was $ 9.85 million (2019), $ 10.63 million (2018) and $ 11.11 million (2017), according to data from Trepp.

Trepp says the loans were underwritten with a 78 percent occupancy rate at the Westin Book Cadillac, but was only 43 percent occupied in the first four months of the year.

CWC Capital Asset Management LLC is the special manager, according to Trepp. A special duty officer tries to find a solution to the debt. Loans could be modified or extended, or another agreement could be made with the owner.

Both loans were taken out in January from Citi Real Estate Funding Inc., according to Trepp.