Westinghouse Credit Corp. will take control of the Hampton Inn in Glen Burnie on Aug. 31 because the hotel's owner defaulted on unrelated loan agreements.
The owner, Krisch American Inns Inc., said yesterday that an obscure provision of its loan agreement with Crestar Bank allowed the bank to demand immediate repayment of the mortgage if Krisch went bankrupt or admitted in writing that it was unable to meet its obligations, said Benjamin Richardson, Krisch's senior vice president and general counsel.
Mr. Richardson said the bank decided to foreclose after Krisch, a publicly owned company based in Roanoke, Va., reported in its annual report that it had defaulted on other loans. Mr. Richardson said none of the loans on which Krisch defaulted was related to Maryland properties, but he would not say which banks held the problem loans.
"We were current with them," Mr. Richardson said regarding Crestar's mortgage on the Hampton Inn. "It's a good property with a positive cash flow. Everyone is trying to get out of the real estate loan business these days."
Crestar officials could not be reached for comment late yesterday.
Westinghouse will end up with the hotel because it co-signed the mortgage for a fee, in what Westinghouse Credit spokesman Brad Henstreet said was an arrangement similar to credit insurance.
Krisch said in a statement that its deal with Westinghouse called for Westinghouse to buy the mortgage loan from Crestar if Krisch defaulted on it.
A second deal between Krisch and Westinghouse called for Krisch to convey the building's ownership to Westinghouse if Westinghouse was forced to buy the loan. The transaction is not expected to affect hotel operations.