Schuyler G. Carroll (SC-1234)1 Jeffrey D.

Vanacore (JV-2000) PERKINS COIE LLP 30 Rockefeller Plaza, 25th Floor New York, NY 10112 Phone: 212.262.6900 Fax: 212.977.1649 and David M. Neff (admitted pro hac vice) PERKINS COIE LLP 131 S. Dearborn, Street, Suite 1700 Chicago, IL 60603-5559 Phone: 312.324.8400 Fax: 312.324.9400 Attorneys for C-III Asset Management LLC UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: Innkeepers USA Trust, et al., Debtors. ) ) ) ) ) ) ) Chapter 11 Case No. 10-13800 Jointly Administered

C-III ASSET MANAGEMENT LLC'S LIMITED OBJECTION TO DEBTORS SECOND MOTION FOR ENTRY OF AN ORDER EXTENDING THE EXCLUSIVE PERIODS DURING WHICH ONLY THE DEBTORS MAY FILE A CHAPTER 11 PLAN AND SOLICIT ACCEPTANCES THEREOF Wells Fargo Bank, N.A., not individually but solely in its capacity as trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2007-C1 (the Trust), by and through C-III Asset Management LLC (C-III), by its undersigned counsel, submits its limited objection to Debtors Second Motion for Entry of an Order Extending the Exclusive Periods During Which Only the
Counsel filed a Notice of Appearance and Request for Service of Papers on behalf of C-III [Docket #1034]. A formal motion to substitute previous local counsel will be filed shortly.
1

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Debtors May File a Chapter 11 Plan and Solicit Acceptances Thereof (the Motion to Extend Exclusivity), and in support thereof, respectfully represents as follows:

INTRODUCTION Through the Motion to Extend Exclusivity, the Debtors seekfor the second timeto extend the exclusive periods during which only the Debtors may file a chapter 11 plan and solicit acceptances of such a plan for an additional 120 days to pursue their proposed sale of 65 of the Debtors 72 hotels (the Plan Sale). C-III objects to the Motion to Extend Exclusivity only insofar as it applies to KPA HI Ontario, LLC (the Ontario Debtor), which owns the Hilton Ontario Airport hotel (the Hilton Ontario) that secures the Trusts claims in these cases, and Grand Prix Ontario Lessee LLC (the Ontario Operating Debtor and together with the Ontario Debtor, the Hilton Ontario Debtors), which operates the Hilton Ontario, because the Plan Sale does not include the Hilton Ontario and the Debtors have not otherwise proposed any viable plan of reorganization with respect to that property. Consequently, there is no cause to extend the exclusive period with respect to the Hilton Ontario Debtors. BACKGROUND FACTS On July 19, 2010 (the Petition Date), Innkeepers USA Trust and certain of its affiliates (collectively, the Debtors), including the Hilton Ontario Debtors, filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code with this Court. On that same date, the Debtors filed a motion (the PSA Motion) [Docket No. 15] to assume a prepetition plan support agreement between the Debtors and one of their primary secured lenders, Lehman ALI Inc. (Lehman), which outlined the principal terms of a purportedly consensual prepackaged restructuring plan. The PSA Motion was met with a flurry of objections from numerous

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creditors, including C-III, and preferred equity holders and was ultimately denied by the Court on September 2, 2010 [Docket No. 403]. On October 27, 2010, the Debtors filed their first motion seeking an extension of the Debtors exclusivity periods for 120 days (the Initial Motion to Extend Exclusivity) [Docket No. 610], in which the Debtors contended that they were in the process of negotiating with various creditor and equity constituencies and soliciting proposals for a new plan of reorganization. On November 10, 2010, the Court granted the Initial Motion to Extend Exclusivity [Docket No. 699]. On January 13, 2011, the Debtors filed the instant Motion to Extend Exclusivity [Docket No. 805], explaining that they were in the midst of finalizing the terms of a proposal to fund a new plan of reorganization. The next day, on January 14, 2011, the Debtors filed the Debtors Motion for Entry of an Order (I) Authorizing the Debtors to Enter Into the Commitment Letter with Five Mile Capital II Pooling REIT LLC, Lehman ALI Inc., and Midland Loan Services, (II) Approving the New Party/Midland Commitment Between the Debtors and Midland Loan Services, (III) Approving Bidding Procedures, (IV) Approving Bid Protections, (V) Authorizing an Expense Reimbursement to Bidder D, and (VI) Modifying Cash Collateral Order to Increase Expense Reserve (the Bid Procedures Motion) [Docket No. 820], which sought, among other things, to approve procedures for the sale of all of the Debtors 72 hotels, including the Hilton Ontario, on an enterprise basis to Lehman and Five Mile Capital II Pooling REIT LLC. On January 26, 2011, the Court entered a Bridge Order extending the Debtors exclusivity periods through the omnibus hearing date on March 29, 2011 [Docket No. 861]. On February 25, 2011, C-III, together with CWCapital Asset Management LLC on behalf of Wells Fargo Bank, N.A., not individually but solely as trustee for the registered holders of

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Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2005-C5, filed their limited objection to the Bid Procedures Motion (the Limited Objection) [Docket No. 968], arguing, among other things, that selling the Hilton Ontario together with the Debtors other 71 hotels on an enterprise basis would not maximize the value of their collateral. The Hilton Ontario, along with six other of the Debtors 72 hotels, is not part of the so-called Fixed Rate Pool or Floating Rate Pool financing facilities, but instead is subject to an individual mortgage, which is now held by the Trust. Moreover, including the Hilton Ontario in the enterprise sale proposed by the Bid Procedures Motion would provide no synergistic value because it is neither an extended stay property nor a Marriott-branded hotel, like many of the hotels in the Fixed Rate and Floating Rate Pools. On March 7, 2011, the Debtors filed their Debtors Omnibus Reply in Support of Stalking Horse Motion (the Reply) [Docket No. 986], in which they agreed to carve out the Hilton Ontario from the Plan Sale proposed by the Bid Procedures Motion and reiterated their offer to relinquish that property back to the Trust. See Reply at 2, 17. Importantly, the Debtors provided no alternative plans for the reorganization for the Ontario Debtor with respect to the Hilton Ontario, only that they will continue to market the hotel. See id. at 2. On March 11, 2011, the Court entered an Order approving the Bid Procedures Motion as modified [Docket No. 1009]. LEGAL ARGUMENT Section 1121(d) of the Bankruptcy Code provides that, upon the request of a party in interest and after a notice and hearing, the Court may extend the exclusive periods in which a debtor may file and solicit approval of a chapter 11 plan only for cause. 11 U.S.C. 1121(d).

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While the term cause is not defined by the Bankruptcy Code, this Court has enumerated nine factors typically considered when making this determination, including: (1) size and complexity of the case; (2) necessity for sufficient time to permit the debtor to negotiate a plan of reorganization and prepare adequate information; (3) existence of good faith progress toward reorganization; (4) if the debtor is paying its bills as they come due; (5) whether the debtor has demonstrated reasonable prospects for filing a viable plan; (6) whether the debtor has made progress in negotiations with its creditors; (7) amount of time that has elapsed in the case; (8) whether the debtor is seeking an extension of exclusivity in order to pressure creditors to submit to the debtors reorganization demands; and (9) whether an unresolved contingency exists. See In re Adelphia Commcns Corp., 352 B.R. 578, 586-87 (Bankr. S.D.N.Y. 2006). A decision to extend exclusivity is committed to the discretion of the Court. See id. at 386. As to the Hilton Ontario Debtors, the majority of these factors weigh against extending exclusivity. With respect to the first factorsize and complexitythe Ontario Debtor is a single purpose entity whose only asset is the Hilton Ontario. Likewise, the Ontario Operating Debtor is a single purpose entity with no assets, other than its rights under the operating lease agreement with the Ontario Debtor. Neither of the Hilton Ontario Debtors are part of the more complex reorganization contemplated by the Bid Procedures Motion, for which the Debtors filed the Motion to Extend Exclusivity. Accordingly, the first factor militates against extending exclusivity. As to the second factor, the Hilton Ontario Debtors have had over eight months to negotiate and file a viable reorganization plan with respect to the Hilton Ontario, which they

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have not done. Instead, the Debtors have focused their efforts on pursuing an enterprise sale of 65 of the Debtors other hotels. The Hilton Ontario Debtors have had sufficient time to develop and pursue a reorganization strategy in these cases (if there was one) and a further extension of exclusivity is unwarranted. With respect to the third factor, there is no evidence that the Hilton Ontario Debtors have made any progress towards a plan of reorganization. Instead, the Debtors have offered to relinquish control and ownership of the Hilton Ontario to the Trust. See Reply at 17. Therefore, this factor also weighs against an extension of exclusivity. The fourth factor is inapplicable. The Hilton Ontario Debtors do not have recurring bills. Prior to the Petition Date, the Ontario Debtor defaulted on its obligations to the Trust, causing the Trust to seek the appointment of a receiver for the Hilton Ontario in California state court. A receiver (the Receiver) was ultimately appointed to manage the Hilton Ontario and maintain control over the cash generated from the hotel, which receivership has continued since the Petition Date. Accordingly, the Receivernot the Hilton Ontario Debtorsis responsible for satisfying the ongoing operating expenses of the Hilton Ontario. With respect to the fifth factor, the Hilton Ontario Debtors have not demonstrated any reasonable prospect for filing a viable plan with respect to the Hilton Ontario. The Ontario Debtors cannot propose a sale of the Hilton Ontario over the objection of C-III, whose right to credit bid the full amount of its claim is expressly reserved by the final cash collateral order entered on September 2, 2010 (the Cash Collateral Order) [Docket No. 402]. See Cash Collateral Order at 6(h). As C-III's claim dwarfs the amount offered for the Hilton Ontario by the stalking horse, there is no chance of any recovery to unsecured creditors and no chance for the Hilton Ontario Debtors to confirm a plan.

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With respect to the sixth factor, the Hilton Ontario Debtors have made no progress in negotiations with creditors other than the Ontario Debtors offer to surrender the Hilton Ontario back to the Trust. See Reply at 17. The Trust hopes to accomplish that goal as quickly as possible. As to the seventh factoramount of time that has elapsedthe Hilton Ontario Debtors bankruptcy cases have been pending for more than eight months now. That is more than sufficient time to negotiate and propose a reorganization plan for two single purpose entities, only one of which has any assets. The eighth factor is easily satisfied as the only reason the Hilton Ontario Debtors would try to extend exclusivity is to pressure the Trust into accede to their demands to leave something on the table for creditors even though the Trust stands to lose many millions of dollars.. The final factor does not apply as there are no unresolved contingencies. In sum, almost all of the factors this Court should consider when determining whether cause exists under section 1121(d) of the Bankruptcy Code weigh heavily against extending the exclusive periods for the Hilton Ontario Debtors. Granting yet another 120 days of exclusivity would only delay this bankruptcy cases further without any prospect of developing a viable plan of reorganization. Accordingly, the Court should permit the Hilton Ontario Debtors exclusive periods to expire and allow other parties, including the Trust, to participate in the reorganization process, if they desire to do so.

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CONCLUSION For the forgoing reasons, the Court should deny the Motion to Extend Exclusivity as to the Hilton Ontario Debtors.

Dated: March 18, 2011

Respectfully Submitted, /s/ David M. Neff Schuyler G. Carroll (SC-1234) Jeffrey D. Vanacore (JV-2000) PERKINS COIE LLP 30 Rockefeller Plaza, 25th Floor New York, NY 10112 Phone: 212.262.6900 Fax: 212.977.1649 scarroll@perkinscoie.com jvanacore@perkinscoie.com David M. Neff (admitted pro hac vice) PERKINS COIE LLP 131 S. Dearborn, Street, Suite 1700 Chicago, IL 60603-5559 Phone: 312.324.8400 Fax: 312.324.9400 dneff@perkinscoie.com Attorneys for C-IIIl Asset Management LLC

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CERTIFICATE OF SERVICE David M. Neff, an attorney, hereby certifies that on March 18, 2011 he caused a copy of C-III Asset Management LLC's Limited Objection To Debtors Second Motion For Entry Of An Order Extending The Exclusive Periods During Which Only The Debtors May File A Chapter 11 Plan And Solicit Acceptances to be filed via the Court's ECF system and served via same on the parties registered to receive notice and on the attached Service List as so indicated. /s/ David M. Neff David M. Neff (admitted pro hac vice) PERKINS COIE LLP 131 S. Dearborn, Street, Suite 1700 Chicago, Illinois 60603-5559 Phone: (312) 324-8400 Fax: (312) 324-9400 dneff@perkinscoie.com

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INNKEEPERS USA TRUST SERVICE LIST

Party Office of the U.S. Trustee Attn: Paul Kenan Schwartzberg 33 Whitehall Street, 21st Floor New York, NY 10004 Email/Fax/Method of Service Fax: 212-668-2255 Party Innkeepers USA Trust c/o Jennifer Marines Paul Basta Kirkland & Ellis LLP 601 Lexington Avenue New York, NY 10022 Appaloosa Investment L.P. I c/o Willkie Farr & Gallagher LLP Rachel C. Strickland 787 Seventh Avenue New York, NY 10019 Best Western International c/o Michael G. Helms 2600 N. Central Avenue, Ste 940 Phoenix, AZ 85004 Email/Fax/Method of Service jennifer.marines@kirkland.com pbasta@kirkland.com patrick.bryan@kirkland.com Via ECF notification

Via U.S. Mail

Appaloosa Investment L.P. I c/o Sidley Austin LLP Lee S. Attanasio 787 Seventh Avenue New York, New York 10019 Kathleen Devlin, Creditor c/o Regnier Taylor Curran & Eddy Sandra Rachel Stanfield 100 Pearl Street, 10th Floor Hartford, CT 06103 Jefferies & Company, Inc. c/o Sonnenschein Nath & Rosenthal LLP Thomas A. Labuda 233 S. Wacker Dr., Suite 7800 Chicago, IL 60606

emcdonnell@sidley.com Fax: 212-839-5599 Via ECF notification sstanfield@rtcelaw.com Fax: 860.527.4343 Via ECF notification tlabuda@sonnenschein.com

rstrickland@willkie.com Fax: 212-728-8111 Via ECF notification mghelms@mghlawfirm.com Fax: Via ECF notification

Via ECF notification

Florida Power Corporation dba Progress Energy Florida c/o Meyer Suozzi English and Klein, P.C. Jil Mazer-Marino 990 Stewart Avenue, Suite 300 Garden City, NY 11530-9194 B&B Parking, Inc. c/o Subranni Zauber LLC Michael Morrow, John Leon 1624 Pacific Avenue PO Box 1913 Atlantic City, NJ 08404

jmazermarino@msek.com Fax: 516-741-6706 Via ECF notification

Jenkins/Gales & Martinez, Inc. c/o Gonzalez, Saggio and Harlan LLC Jeannette M. Conrad 180 N. Stetson Ave., Suite 4525 Chicago, IL 60601

jeannette_conrad@gshllc.com

Via ECF notification

Via U.S. Mail

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DEBTOR'S RULE 2002 LIST (published 3/15/11)

Party Apollo Investment Corporation Attn: Joseph D. Glatt 9 West 57th Street New York, NY 10019 Email/Fax/Method of Service jglatt@apollocapital.com Fax: 212-515-3443 Via U.S. Mail Party Five Mile Capital II Pooling International LLC c/o Arnold & Porter LLP Anthony Boccanfuso Michael J. Canning 399 Park Avenue New York, NY 10022-4690 LNR Partners, LLC c/o Bryan Cave LLP Michelle McMahon Lawrence P. Gottesman 1290 Avenue of the Americas New York, NY 10104 Ad Hoc Committee of Preferred Shareholders c/o Dewey & Leboeuf LLP Martin J. Bienenstock Timothy Q. Karcher Irena M. Goldstein 1301 Avenue of the Americas New York, NY 10019 Rofar Realty Company, Inc. c/o Golenbock Eiseman Assor Bell & Peskoe LLP Jonathan L. Flaxer 437 Madison Avenue New York, NY 10022 Email/Fax/Method of Service anthony.boccanfuso@aporter.com michael.canning@aporter.com Fax: 212-715-1399 Via ECF notification

Iron Mountain Information Mgmt, Inc. c/o Bartlett Hackett Feinberg PC Frank F. McGinn 155 Federal Street, 9th Floor Boston, MA 02110

ffm@bostonbusinesslaw.com Fax: 617.422.0383 Via ECF notification

michelle.mcmahon@bryancave.com lawrence.gottesman@bryancave.com Fax: 212-541-4630 Via ECF notification mbienenstock@dl.com tkarcher@dl.com Fax: 212-259-6333 Via ECF notification

Lehman ALI Inc. c/o Dechert LLP Nicole B. Herther-Spiro Brian E. Greer 1095 Avenue of the Americas New York, NY 10036

brian.greer@dechert.com nicole.hertherspiro@dechert.com Fax: 212-698-3599 Via ECF notification

LNR Partners, Inc. c/o Duane Morris LLP Phillip K. Wang William Heuer Margery N. Reed One Market Plaza Spear Tower - Suite 2200 San Francisco, CA 94105-1127

pwang@duanemorris.com wheuer@duanemorris.com mreed@duanemorris.com Fax: 415-358-4725 Via ECF notification

jflaxer@golenbock.com Fax: 212.754.0330 Via ECF notification

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Party Midland Loan Services, Inc. c/o Haynes and Boone, LLP John D. Penn 201 Main Street, Suite 2200 Fort Worth, TX 76102

Email/Fax/Method of Service john.penn@haynesboone.com Fax: 817-348-2300 Via U.S. Mail

Party Midland Loan Services, Inc. c/o Haynes and Boone, LLP Lenard M. Parkins Mark Elmore 30 Rockefeller Plaza, 26th Fl. New York, NY 10112 Hilton Worldwide, Inc. c/o Kaufmann Gildin Robbins & Oppenheim LLP Bruce R. Alter 550 Mamaroneck Ave., Suite 510 Harrison, NY 10528

Email/Fax/Method of Service lenard.parkins@haynesboone.com mark.elmore@haynesboone.com Fax: 212- 884-8211 Via ECF notification altergold@aol.com Fax: 914-670-0031 Via U.S. Mail

Five Mile Capital Partners LLC c/o Kasowitz Benson Torres & Friedman LLP David M. Friedman Daniel A. Fliman Adam L. Shiff 1633 Broadway New York, NY 10019 Hilton Worldwide, Inc. c/o Kaufmann Gildin Robbins & Oppenheim LLP David J. Kaufmann Kevin M. Shelley 777 Third Avenue, 24th Floor New York, New York 10017 TriMont Real Estate Advisors, Inc. c/o Kilpatrick Stockton LLP Jonathan E. Polonsky Michael D. Crisp 31 West 52nd Street, 14th Fl. New York, NY 10019

dfriedman@kasowitz.com dfliman@kasowitz.com ashiff@kasowitz.com Fax: 212-506-1800 Via ECF notification

dkaufmann@kaufmanngildin.com kshelley@kaufmanngildin.com Fax: 212-755-3174 Via ECF notification

Oakland County Treasurer c/o Kilpatrick & Associates, P.C. Richardo I. Kilpatrick 903 North Opdyke Road, Suite C Auburn Hills, MI 48326

ecf@kaalaw.com Fax: 248-377-0800 Via ECF notification

mcrisp@kilpatricktownsend.com Fax: 212-775-8819

Via U.S. Mail

TriMont Real Estate Advisors, Inc. c/o Kilpatrick Stockton LLP Todd C. Meyers Rex R. Veal Mark A. Fink 1100 Peachtree Street, NE Atlanta, GA 30309-4530

tmeyers@kilpatrickstockton.com rveal@kilpatrickstockton.com mfink@kilpatrickstockton.com Fax: 404-815-6555 Via ECF notification

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Party Ecolab Inc. c/o Kohner Mann & Kailas SC Samuel C. Wisotzkey 4650 N. Port Washington Rd. Milwaukee, WI 53212-1059

Email/Fax/Method of Service swisotzkey@kmksc.com Fax: 414-962-8725 Via ECF notification

Party Carrollton-Farmers Branch Independent School District c/o Law Offices of Robert E. Luna Andrea Sheehan 4411 N. Central Expressway Dallas, TX 75205 Bexar County c/o Linebarger Goggan Blair & Sampson, LLP David G. Aelvoet 711 Navarro, Suite 300 San Antonio, TX 78205 Official Committee of Unsecured Creditors of Innkeepers Trust USA c/o Morrison & Foerster, LLP Lorenzo Marinuzzi Brett H. Miller Jordan A. Wishnew 1290 Avenue of the Americas New York, NY 10104-0050 San Bernardino County, California Taxing Authority c/o Romero Law Firm Martha E. Romero 6516 Bright Avenue Whittier, CA 90601

Email/Fax/Method of Service sheehan@txschoollaw.com Fax: 214-521-1738 Via ECF notification

Bexar County c/o Linebarger Goggan Blair & Sampson, LLP Elizabeth Weller 2323 Bryan Street Suite 1600 Dallas, TX 75201 Anand Enterprise, Inc. c/o Lowndes Drosdick Doster Zachary Bancroft 450 S. Orange Street, Suite 800 Orlando, FL 32801

dallas.bankruptcy@publicans.com Fax: 469-221-5002 Via ECF notification

sanantonio.bankruptcy@publicans.com Fax: 210-225-6410 Via ECF notification

zachary.bancroft@lddkr.com Fax: 407-843-4444 Via ECF notification

lmarinuzzi@mofo.com bmiller@mofo.com Fax: 212-468-7900 Via ECF notification

Apollo Investment Corporation c/o Paul Weiss Rifkind Wharton & Garrison LLP Alan W. Kornberg, Andrew Ehrlich, Lauren Shumejda 1285 Avenue of the Americas New York, NY 10019-6064

akornberg@paulweiss.com aehrlich@paulweiss.com lshumejda@paulweiss.com Fax: 212-757-3990 Via U.S. Mail

romero@mromerolawfirm.com Fax: 562-907-6820

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Party U.S. Foodservice, Inc. c/o Saul Ewing LLP Melissa W. Rand Jeffrey C. Hampton Centre Square West 1500 Market Street, 38th Floor Philadelphia, PA 19102 State of Michigan, Dept. of Treasury c/o Michael A. Cox, Attorney Gen. Juandisha Harris, Asst Atty Gen. Cadillac Place, Ste. 10-200 3030 W. Grant Blvd. Detroit, MI 48202

Email/Fax/Method of Service mrand@saul.com jhampton@saul.com Fax: (215) 972-1848 Via ECF notification

Party Marriott International, Inc. c/o Sheppard Mullin Richter & Hampton LLP Carren B. Shulman Jane Qin 30 Rockefeller Plaza, Suite 2400 New York, NY 10112 C-III Asset Management CWCapital Asset Management c/o Tashjian & Padian Gerald Padian Bradley M. Rank 729 Seventh Avenue New York, New York 10019

Email/Fax/Method of Service cshulman@sheppardmullin.com jqin@sheppardmullin.com Fax: 212-653-8701 Via ECF notification

harrisjm@michigan.gov

gpadian@tashpad.com brand@tashpad.com Fax: 212-319-9883 Via ECF notification

Via ECF notification

York Credit Opportunities Fund LP c/o Wilmer Cutler Pickering Philip Anker 399 Park Avenue New York, NY 10022

philip.anker@wilmerhale.com Fax: 212-230-8888 Via ECF notification

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