Distress has hit the lodging sector of metro Atlanta’s commercial real estate landscape, landing in the form of a foreclosure sale at an upscale hotel brand in the well-heeled suburban market of Alpharetta.
The 119-key Hamilton, which operates as part of Hilton’s Curio Collection, went to the Atlanta-based Peachtree Group in a credit bid at auction recently, the Atlanta Business Chronicle reported.
Property records indicate a winning bid of $42 million (almost $353,000 per key) on July 2 by the firm, which had loaned $40 million to hotel developer Mayfair Street Partners.
The lender gets a property at 35 Milton Avenue, within a stroll from Alpharetta City Center in the historic downtown of the city of 70,000. The property includes an entertainment venue and the Sorella Vicina restaurant, among other tenants that complement the hotel.
The loan to the hotel’s developer was due to mature in January, and the foreclosure came after a prolonged period of attempting to work through financial difficulties, the outlet reported.
“Throughout the loan term, we worked constructively with the borrower, and we have now taken possession of the hotel via foreclosure,” Peachtree Group said in a statement.
Office landlords have been hard hit by the weak demand stemming from work-from-home trends combined with increased borrowing costs due to higher interest rates. The hospitality sector is feeling pain too, with older hotels in need of renovation generally at the forefront of difficulties.
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The Hamilton fell into default despite being relatively new, coming online in 2021 in place of a string of low-rise retail shops. The hotel had a value of $21.3 million in 2022, but it dropped about 30 percent this year to $16.2 million, according to the Fulton County Board of Assessors.