But when the recession struck, group bookings fell drastically and the hotel's bottom line slumped, he said.

The Hyatt bonds, only made available to institutional investors because of their risk, are owned by a handful of asset management firms, including Vanguard, Deutsche Bank and Franklin Templeton. One firm, Nuveen Asset Management LLC, holds about half of the bonds' value.

Investors like the tax-exempt bonds because they often produce higher returns than municipal general obligation bonds, which are repaid with government funds, including tax revenues, Hildreth said.

These investment firms will decide the future of the Hyatt in the event of a default, Brennan said. While they could decide to foreclose on the property — taking ownership away from MEDCO — Brennan said he thinks that's unlikely because their investment would no longer be tax-exempt.

"Their best value will be continuing in supporting a high-performance resort facility," said Brennan of the investors who meet regularly and know of the resort's financial difficulties. "There's no doubt in my mind that we're going to get back to stabilization."

The investors must determine whether they will recoup more money by keeping the Hyatt operating under the current ownership or by taking over the property, O'Brien said. The most likely outcome, he said, is that the investors will agree to restructuring the debt, perhaps by reducing the interest rate or the principal. That will allow the Hyatt's operations to continue uninterrupted.

Hildreth agreed that the investors are likely to negotiate some type of payment forbearance or restructuring to avoid declaring a legal default.

All but one of the Hyatt bondholders declined to comment or did not respond to requests for comment on the hotel's future.

Lord Abbett & Co. LLC, the third-largest holder of the Hyatt bonds, said through a spokesman that "it's still too early to tell" what the investors will decide.

"We don't even know if default's going to happen," said Jim Sansevero, spokesman for the Jersey City, N.J.-based investment manager. "It's premature to say."

Unless the investors take some type of drastic action, Brennan said, the hotel's operations will continue as normal. A Hyatt spokeswoman said the Chicago-based hotelier plans to continue managing the property.

The hotel has plenty of money to keep paying its vendors because operating expenses come before debt payments, Brennan said. There also are ample reserve funds for "repairs and replenishments" to keep the hotel up-to-date, he said.

"There's a lot of value that this asset brings" to Cambridge, said Brennan, citing 300 to 700 jobs, depending on the time of year. "From a realistic perspective, we will continue as a going concern."

steve.kilar@baltsun.com

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