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Image Credit Georgian Terrace Hotel
Sotherly Hotels Inc. has received a Notice of Default on a mortgage loan secured by the Georgian Terrace Hotel in Atlanta, with potential foreclosure actions being considered by the lender.
Sotherly Hotels Inc. announced it has received a Notice of Default from the special servicer of its mortgage loan for the Georgian Terrace Hotel in Atlanta. The notice indicates that SOHO Atlanta LLC, a subsidiary of Sotherly Hotels, is in default due to non-payment of amounts due under the loan agreement. Wilmington Trust, National Association, acting as Trustee, is considering actions to protect its interests, including foreclosure and reconveyance of the security under the loan documents.
The financial obligation associated with the default is approximately $38 million as of July 2, 2025. Sotherly Hotels has engaged a consultant to negotiate an extension of the mortgage loan with the special servicer. Proposed extension terms have been submitted, and the company plans to continue making interest payments, real estate tax escrow, and required reserve payments during the negotiation period.
The default notice follows a formal process typical of commercial mortgage-backed securities (CMBS) loans, which includes a voluntary transfer to special servicing and the issuance of a formal default notice. The company is currently in negotiations with the special servicer, with which its CMBS consultant is assisting.
The default is identified as a maturity default, which does not affect the company’s ability to meet its ongoing interest requirements. Sotherly Hotels attributes the situation to tighter underwriting standards and higher interest rates, which have increased the prevalence of maturity defaults in the commercial real estate sector. The company is working with the special servicer to explore solutions, including a potential multi-year extension of the loan.
This development is part of broader challenges in the commercial real estate market, where refinancing has become more difficult due to changing financial conditions. Sotherly Hotels continues to address the situation to reach a resolution that aligns with its financial strategy.
