A Denver hospitality management firm acquired a swanky downtown Atlanta hotel after its last owner surrendered the property over the summer to avoid foreclosure.
Stonebridge Hospitality Management paid $24.8 million for the W Atlanta — Downtown hotel off Ivan Allen Jr. Boulevard, according to Fulton County property records. That’s less than half of what Ashford Hospitality Trust, the hotel’s previous owner, paid eight years ago.
Stonebridge said in a news release that it acquired five hotels across the country in late November, including the 237-room W Atlanta. Stonebridge acquired the properties through a deed in lieu of foreclosure, which was first reported by the Atlanta Business Chronicle. The condos on the upper floors of the hotel are privately owned and were not included in the sale.
The W hotel and the 763-room Sheraton Atlanta Hotel became two of the largest properties to face loan distress this year as the office and hospitality markets unevenly recover from the COVID-19 pandemic. High interest rates and a wall of debt set to mature in the coming years have some economists worried a wave of foreclosures could sweep through underperforming commercial properties.
In July, Texas-based Ashford filed a federal notice that it would return the W Atlanta and 18 other hotels across the country because they were not generating enough revenue to cover their debts. The decision to offload the hotels saved Ashford about $305 million in costs to continue holding the properties, while also reducing the firm’s debt portfolio by about $700 million, according to filing.
The 19 hotels were financed by three commercial mortgage-backed securities, whose lenders included Bank of America, Barclays Bank and Morgan Stanley. The loans matured in June, but Ashford Hospitality Trust did not extend the loans after deciding the return on investment was not worth it, according to the filing.
The W hotel, which is managed by Marriott, opened in January 2009, coinciding with the Great Recession.
Credit: Phil Skinner
Credit: Phil Skinner
The situation with Ashford was the second time an owner of the W hotel faced issues with its lenders. Following a complicated foreclosure that also involved the property’s primary lender going through bankruptcy, the hotel went through foreclosure in October 2010.
Ashford Hospitality Trust would acquire the hotel in 2015 for nearly $57 million.
Neither Ashford nor Stonebridge responded to a request for comment. This is Stonebridge’s first hotel in Georgia.
“It’s exciting to not only expand in existing markets but also grow in new markets with these cash-flowing hotels within the Hilton and Marriott families,” Steve Kakaty, Stonebridge’s chief investment officer, said in the release. “We are thrilled to add these properties, which offer both renovation and operational upside, to our portfolio.”
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