|By Leon Stafford and Christopher Quinn,
The Atlanta Journal-ConstitutionMcClatchy-Tribune Regional News
Oct. 11, 2011--One of metro Atlanta's ritziest lodging addresses -- the building housing the W Hotel in Buckhead -- has been put on foreclosure notice.
The property, a former Crowne Plaza, was renovated into the flashy Starwood boutique brand in 2008 with tremendous publicity. The interior is designed by Thom Filicia of "Queer Eye for the Straight Guy" fame and the rooftop bar is part of New York celebrity nightspot operator Rande Gerber's chain.
The building's financial distress is another symbol that metro Atlanta's commercial and residential real estate sectors are still struggling to recover from the long economic downturn. Foreclosure notices in the area were up 16 percent in the combined sectors in October, according to Equity Depot of Kennesaw, which tracks monthly notices. Commercial properties typically make up about 5 percent of the number but account for more in dollar terms.
Mit Shah, chief executive officer of Atlanta-based Noble Investment Group, which owns the W property, said Monday that the company is working with Prudential, the lender, to restructure the almost $62 million loan that matures in November. The foreclosure notice was first advertised in July.
Shah said he expects the deal to be completed over the next week or so and for the loan to be modified for around another five years.
Shah said the loan negotiations have no effect on the hotel, which he said is doing well.
The W Midtown, which Noble also owns, will see its loan mature next year, he said.
"The economic effect on [hotels and motels], gas stations, truck stops, etcetera is very evident," said Equity Depot President Barry Bramlett. "Don't expect much of this to change until economic conditions do."
Foreclosure notices are the first step in the process but do not always lead to a repossession. Property buyers can avoid foreclosure by paying loans or negotiating new deals with banks or lenders.
Metro Atlanta's unemployment has remained high in part because the area has relied so heavily on construction, including the building of big office towers, strip malls and hotels.
One example that showed up in Equity Depot's numbers were notices for a $175 million loan on 19 separate Jameson Inns in Georgia.
Mark Woodworth, president of PKF Hospitality Research, said the hospitality industry is recovering, but that some property owners face foreclosure because they are not generating enough income from hotel stays to pay the mortgage, have seen the value of their buildings collapse or are having trouble getting financing after their loans mature.
He said the industry is especially susceptible because the impact of a downturn hits it earlier than other sectors.
"Travelers can stop renting rooms very quickly and that can show up in occupancy overnight." he said.
Paul Breslin, president of Panther Hospitality, said the advantage of commercial foreclosures is that they flush out bad or unsupportable loans. That has led recently to an uptick in commercial property sales.
"I clearly see a lot of listings and a lot more transactions," he said. "There is a lot of activity, a lot of interest and a lot of movement."
19 separate Jameson Inns in Georgia.
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