Ink Drying on Two Strategic Atlanta Deals

Midtown Atlantidtow

ATLANTA—Atlanta’s commercial real estate market is seeing plenty of activity this week. From lenders to investors, the ink is drying on some big deals. Carey Watermark Investors 2 just acquired the Renaissance Atlanta Midtown Hotel. The 21-story, full-service hotel includes 304 guestrooms. The Renaissance sits at the northwest corner of West Peachtree Street and Abercrombie Place in Midtown Atlanta. Constructed in 2009 and converted to a Renaissance in 2011, the boutique hotel has seen more than $3 million of capital improvements completed between 2011 and 2015. That includes a complete and reconception of the hotel restaurant, Community Smith, reopened in January 2015. “The acquisition of the Renaissance Atlanta Midtown Hotel represents the opportunity to invest in a newly built, upper upscale hotel with a strong brand affiliation, located in one of the most significant and growing business districts in the Southeast,” says Michael Medzigian , CEO of CWI 2. “In addition to generating attractive initial current cash flow, we believe the property’s ongoing performance and longer-term value can be improved through the implementation of strategic revenue enhancement and operating initiatives.” RevPAR growth has been significant within the Atlanta market, experiencing 13% and 9.3% growth in 2014 and 2015, respectively. Year-to-date through June market RevPAR continues to trend positively, up 6.3% compared to the same period last year. As a result of relatively low supply additions, growth is expected to remain strong with approximately 6.0% RevPAR growth projected over each of the next two years. “We believe this investment in conjunction with the implementation of our strategic value-add initiatives will enhance the diversification of CWI 2′s growing portfolio and its ability to generate solid long-term cash flow,” Medzigian says. As one of the only full-service hotels in the area, is betting the Renaissance is can leverage demand generators, including 14.7 million square feet of office space, Georgia Tech, the Coca Cola headquarters and the 189-acre Piedmont Park. What’s more Midtown is considered the cultural center of Atlanta, serving as home to the 1 million-square-foot Woodruff Arts Center, The Fox Theatre, and the Atlanta Botanical Gardens. NCR Corporation is constructing its $260 million, 22-story, 485,000-square-foot headquarters less than one block from the Renaissance, adding nearly 4,000 jobs to the Midtown market . Moving on to the capital markets, Greystone closed a $62 million Freddie Mac loan for a 510-unit multifamily property in Marietta, GA. Keith Hires and Greg Krafcik of Greystone closed the loan for Watermark at East Cobb for Cortland Partners. Mike Galla and David Collie of iCap Realty Partners arranged it. Greystone provided a $58,000,000 bridge loan in 2015 for the recapitalization of Watermark at East Cobb, and then guided Cortland to a permanent exit with Freddie Mac’s Program Plus platform within 11 months. The seven-year floating rate Freddie Mac loan includes two years of Interest-only followed by 30-year amortization for the remaining term.