The owner of the landmark Embassy Row Hotel in Dupont Circle wants a little elbow room on the terms of its loan, as the sluggish economy tempers the rebound of business and leisure travel.

Ark Real Estate Partners, an investment outfit from New York City, requested the $44.2 million securitized mortgage held by Wells Fargo on the 197-room hotel be transferred into special servicing to get a loan modification, said Jeffrey Harvey, the company’s vice president and director of operations. The loan is set to mature next June, but Ark, he said, would like to extend the term as it considers repositioning the property at 2015 Massachusetts Ave. NW.

“We’re trying to contend with the maturity date before we start commencing any type of renovation or construction,” he said, stressing that the company is not facing default and has not been delinquent on payments.

Lenders transfer securitized loans to a special servicer, typically in light of delinquency or default, to determine whether the debt should be restructured or sent to foreclosure.

LNR Partners, the special servicer in charge of the debt, declined to discuss the transfer. Data from the research firm Trepp shows that Ark is current on its loan payments.

“We see it all the time where the borrower will ask for the loan to be shipped over to special servicing to get relief,” said Manus Clancy, managing director of Trepp. “In some ways, it’s kind of good business in this marketplace because special servicers have been willing to cut borrowers some slack.”

Like the rest of the lodging industry, the Embassy Row witnessed precipitous declines in business during the depths of the downturn, closing out 2009 at 64 percent occupancy, according to Trepp. Occupancy has since rebounded to 85.6 percent, with average daily rates at $228, as of the end of the first quarter.

Yet the debt coverage ratio on the loan hovered around 0.91 at the end of March, meaning there is only enough operating income to cover 91 percent of the payments — the balance has to come from the owner’s reserves.

Harvey declined to discuss the particulars of the hotel’s performance, but said demand has substantially picked up this year, notwithstanding the current summer lull.

Late last month, Ark dropped the Hilton moniker from the Embassy Row flag, opting to have Willow Hotels, its management arm, run the property as an independent hotel. Harvey said the company, which purchased the property for $69 million in 2007, is trying to decide whether to align with a new brand or remain independent.

“When we looked at the Hilton component, we were a very small piece of a very large Hilton presence,” Harvey said. “When you’re talking about the larger brands that have a strong presence in D.C., if you’re not a property of a large enough scale, you’re really not on a level playing field.”