W Hotel in Downtown Atlanta Sold

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Square Mile Capital Management LLC has completed the successful turnaround of the W Hotel Atlanta Downtown by selling it to Ashford Hospitality this week  The 237-room hotel, which was acquired via deed in lieu of foreclosure in 2010, was sold for approximately $240,000 per room (approximately $58 million USD).
 
A centerpiece of Atlanta's Allen Plaza mixed-use complex, the hotel opened in January 2009, while the local hospitality market was suffering the severe impact of the U.S. economic recession.  Debt on the property had been originated by a subsidiary of locally-based Silverton Bank, which failed a few months later.  The Federal Deposit Insurance Corporation (FDIC), which assumed control of Silverton's assets, then assembled a package of 57 Silverton hotel loans and sold a 40 percent stake to Square Mile in 2010, thereby forming the partnership that subsequently took possession of the W.
 
Square Mile, as managing partner, embarked on a program to maximize operational excellence, increase occupancy and enhance the value of the property.  By the time of the sale, net operating income had tripled - as average occupancy reached 73 percent and the average daily room rate grew to over $200.     
 
Square Mile Senior Principal Nolan Hecht commented, "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.  Given the strength of the subsequent market upswing, it's clear that our timing couldn't have been better."
 
He continued, "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. Their confidence and hard work have been rewarded."