Two CMBS loans headed for default -Credit Suisse

NEW YORK, Nov 18 (Reuters) - Two of the largest loans in recent commercial mortgage-backed securities, including one financing two Westin hotels, are close to default, according to Credit Suisse analysts.

A $209 million loan for Westin hotels in Tucson, Arizona, and Hilton Head, South Carolina, in October was transferred to a special servicer in October "due to imminent default," the analysts said in a research note on Tuesday.

The loan, originated by JPMorgan Chase & Co (JPM.N) in December 2007, is split between two JPMorgan CMBS issues, representing 8.9 percent of each deal, Credit Suisse said.

A JPMorgan spokesman declined immediate comment.

Westin is owned by Starwood Hotels & Resorts Worldwide Inc (HOT.N).

A $125.2 million commercial mortgage for the Promenade Shops at Dos Lagos -- a retail center located in California's foreclosure-ridden Riverside-San Bernardino-Ontario metropolitan area -- this month was also transferred to a special servicer, which focuses on troubled loans, according to Credit Suisse.

The Promenade loan is 10.8 percent of one of the JPMorgan CMBS containing part of the Westin loan.

Commercial real estate securities have been shattered this year amid expectations weak underwriting standards of recent years and slowing economic growth will increase defaults from historically low rates. Many loans were made on expectations that cash flows from office rents, retail stores and hotels would continue to rise.

Tight credit conditions have also eliminated refinancing opportunities.

The percentage of commercial real estate loans sent to special servicers has jumped to nearly 1 percent of deals by mid-2008 from less than 0.5 percent a year earlier, according to JPMorgan data. The data suggest more defaults, and possibly interest shortfalls for investors as fees to special servicers mount, JPMorgan said in a slide presentation this week. (Reporting by Al Yoon; Editing by Leslie Adler)