Depressing Article
Here is an article on trouble at Extended StayAmerica. Lightstone's April 2007 acquisition of Extended Stay was one of the last highly leveraged real estate deals before the Credit Crisis began in August 2007. Extended Stay has not defaulted yet, and according to the article, any action is a month or two off. Here are some interesting quotes from the article:

One wrinkle in negotiations is that Extended Stay isn't likely to file for bankruptcy protection, because of provisions common in commercial mortgage-backed securities deals that would expose more properties of its founder, David Lichtenstein. A more likely path is for Mr. Lichtenstein to turn Extended Stay directly over to lenders or to swap enough equity for debt to give bondholders control of the company.

Here is more cherry news:

During the real-estate lending boom, Wall Street originated $600 billion of commercial mortgage-backed securities. The default rate on commercial mortgage debt has remained near historic lows, even while residential-related debt suffered a severe downturn.

But that is now beginning to change, sending new shock waves into much-battered banks, private-equity funds and other financial institutions that participate in the $1 trillion commercial real-estate debt market. Hotel landlords typically are the first to feel the pain in a downturn because hotels have the shortest leases in real estate -- one night at a time.

The article also states that commercial real estate value have dropped 15% to 20%, but doesn't give sprecifics. The article ends on this note:

Troubles also have surfaced at Lightstone's Prime Retail division, which owns roughly 30 malls and shopping centers in the U.S. and Puerto Rico. Lightstone has sought to turn over at least six of its malls to lenders after falling behind on debt payments.

Debt-laden landlords of all types of property are beginning to struggle staying current on their mortgages as rents fall and vacancies rise. New York City office space that had been renting for $120 a square foot is now being dumped on the sublease market for about half of that amount.