ATLANTA—On the heels of a successful turnaround, The W Hotel Atlanta Downtown has a new owner. A partnership led by Square Mile Capital Management just sold the hotel to Ashford Hospitality Trust.

The 237-room hotel, which was acquired via deed in lieu of foreclosure in 2010, was sold for about $240,000 per room. That equals about $58 million.

“During 2010-2012, in the aftermath of a crippling recession and at the bottom of the market cycle, Square Mile was one of the industry's most active investors in sub-performing hotel debt, buying partial or full stakes in a total of over 100 senior mortgages,” says Square Mile Senior principal Nolan Hecht. “Given the strength of the subsequent market upswing, it's clear that our timing couldn't have been better.”

A centerpiece of Atlanta's Allen Plaza mixed-use complex, the hotel opened in January 2009. At the time, Atlanta's hospitality market was suffering the severe impact of the Great Recession. 

A subsidiary of locally-based Silverton Bank, which failed a few months later, had originated debt on the property. The Federal Deposit Insurance Corporation, which assumed control of Silverton's assets, then assembled a package of 57 Silverton hotel loans and sold a 40% stake to Square Mile in 2010. That formed the partnership that subsequently took possession of the W.

As managing partner, Square embarked on a program to optimize operations excellence, increase occupancy, and increase property value. At the time of the sale, net operating income had tripled as average occupancy reached 73% and the average daily room rate grew to over $200.     

“In this specific instance, the property's onsite management and our corporate asset management team were especially confident that the W Hotel Atlanta Downtown could be positioned strategically as one of the city's leading hotels,” Hecth says. “Their confidence and hard work have been rewarded.”

CBRE also has a good turnaround story to tell this week. Check out my article: CBRE Drives Mass Turnaround in 'Silicon Peach.'