BETHESDA, Md.—RLJ Lodging Trust announced that it has acquired the 78-room Residence Inn Atlanta Midtown Historic located in Atlanta, Ga. In November 2009, the company purchased a mortgage loan collateralized by the hotel for approximately $5.0 million, or approximately $64,000 per key. The company initiated and successfully acquired the asset through a foreclosure sale after the borrower defaulted on the loan in early 2013.
The hotel will be closed later this year to undergo a comprehensive renovation that will include upgrades to the guestrooms and public spaces. When the hotel re-opens in the third quarter of 2014, it will continue to have the Residence Inn by Marriott flag. RLJ expects that the total investment, including capital expenditures, will represent a forward capitalization rate of approximately 12 percent based on the hotel’s 2015 net operating income.
“Our acquisition of this mortgage loan provided us with yet another opportunity to purchase an attractive asset in a key market at a significant discount to replacement cost,” commented Thomas J. Baltimore, Jr., president and chief executive officer. “Our initial investment thesis for this mortgage loan included us owning the underlying real estate. We immediately recognized the value of this asset given its location in such a desirable submarket of Atlanta and the strength of the Residence Inn brand.”
The company expects that the hotel will continue to benefit from its strong location, brand affiliation, and once completed, from its comprehensive renovation.