ATLANTA-Houston-based Moody National REIT I, a non-traded publicly-registered REIT, which became effective on April 15, 2009, made its first official purchase with the 128-unit Residence Inn by Marriott in Atlanta's Perimeter Center. The REIT’s focus is on acquiring select-service hotels in the top 25 metropolitan markets. Over the next two years, plans call for it to raise $1.1 billion through the sale of shares to fund more acquisitions.

The acquisition of the Residence Inn was done in a manner befitting the times. “The real activity in the hotel business today is in foreclosures,” says Guy Trusty, president of Lodging & Hospitality Realty in Coral Gables, Florida. There are few conventional sales, he says, because so many hotels have suffered a loss in value over the last couple of years.

Rather than buying hotels in a conventional way, investors today are buying hotel notes from the lenders which ultimately leads to the liquidation of the hotel, says Trusty. In this way, an investor can own the hotel for the value of the note, which typically is written down by 40% to 50%, but that write-down doesn’t include the owner’s equity, so in reality, he says, the write-down of the property value is actually more than 50%, a bargain by any standard.