A Raleigh Sheraton Sold at Minus 42% and Still Filed

Downtown full-service hotels are hitting the wall from both ends: bankruptcy court in Raleigh, a CMBS modification in Jersey City.

Key Highlights

• Raleigh Hotel XXIX Owner LLC, the entity tied to the 17-story, 1982-built Sheraton Raleigh Hotel, filed Chapter 11 in the Eastern District of North Carolina, listing debts and liabilities of $1M–$10M; largest listed creditor Phoenix Ltd. Partnership at $1.2M.
• The hotel sold in March 2026 to White Lodging for $27.78M, about 42% below its $47.85M 2015 price (our arithmetic). White Lodging announced a Sheraton-to-Westin conversion; the reflag has not occurred and renovations were under way.
• Prior stress: a December 2025 Wake County judgment for roughly $107K in unpaid state taxes and an earlier CMBS loan default reported by TheStreet.
• Across the Hudson: the owner of the 351-room Hyatt Regency Jersey City, bought four years ago, is negotiating a modification of its $100M CMBS loan (CGCMT 2016-P5 and 2016-P6), per Commercial Real Estate Direct. Reported 2022 purchase price of $117M is single-origin as of publication.
• Which entity filed — the pre-sale owner or a White Lodging affiliate — is not clear from public reporting; the operating-company framing suggests a legacy entity resolving pre-sale claims. Flagged.

The Signal

• A 42% basis reset was not enough to clear legacy liabilities.
• Full-service downtown hotels financed in 2016–2022 are the next loan-mod cohort.
• Hospitality distress is arriving as small filings and quiet mods, not headline foreclosures.

Two full-service hotels, two coasts, two different mechanisms, one week. Raleigh went to court; Jersey City went to the special servicer. Both are 1980s-to-2010s boxes in secondary downtowns where group and corporate demand has not fully returned.

The Raleigh number that matters is the 42% price cut between 2015 and 2026. That is the market clearing a 17-story downtown hotel at a fraction of prior basis, with a brand upgrade priced in — and the filing shows the old capital stack still had claims to resolve.

Jersey City is the cleaner read. A $100M loan from 2016 securitizations sits under an ownership that paid $117M in 2022, per reporting. If NOI has fallen materially against the 2016 underwriting, the modification conversation is about the lender's willingness to extend — and yesterday's Fed commentary says that willingness is shrinking.

Neither asset is a resort or a trophy. The stress is in the middle of the market: full-service, downtown, meeting-space heavy, capex deferred.

For buyers, the Raleigh trade is the template: buy at 40%-plus off the last cycle, reflag, and renovate — but diligence the seller entity's liabilities, because a Chapter 11 on the prior owner can still complicate a clean close.

Implications

Hotel lenders with 2016–2019 CMBS exposure on secondary-market full-service assets should expect modification requests to accelerate as the extension window narrows. Buyers should underwrite reflag capex and legacy claims, not just the discount. Hotel owners in group-dependent downtowns without a repositioning plan are the sellers of 2027.