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Cerebus, Chatham Nix Innkeepers Buy Plans

(Reuters) – Chatham Lodging Trust and Cerberus Capital Management LP CBS.UL said on Monday they had ended their $1.1 billion commitment to buy 64 hotels owned by the bankrupt Innkeepers USA Trust.

The real estate investment trust and the investment company cited the occurrence of a “material adverse” condition for pulling out of the deal.

Stock markets have dropped sharply in recent weeks and high-yield bond spreads have widened, indicating investors are increasingly averse to risky investments amid concerns that the U.S. economy may be teetering on recession.

Innkeepers operates hotels under the Hilton, Hyatt and Marriott brands and filed for bankruptcy in July 2010 with $1.29 billion in secured debt.

Cerberus and Chatham won the auction for the 64 hotels in a May auction.

A lawyer and spokeswoman for Innkeepers did not immediately return a call for comment.

Shares of Chatham were down 3.8 percent at $10.02 in early Monday trading.

The case is in re: Innkeepers USA Trust, U.S. Bankruptcy Court, Southern District of New York, No. 10-13800

(Reporting by Tom Hals, editing by Matthew Lewis)