RLJ Lodging Trust
) purchased a hotel - Residence Inn Atlanta Midtown Historic - in
Atlanta, Ga. through a foreclosure sale. The move helped the
company to add a premium asset to its portfolio at a substantial
discount to its replacement cost.
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In particular, RLJ Lodging purchased a mortgage loan in Nov 2009
for around $5.0 million. The loan was collateralized by this
78-room Residence Inn Atlanta Midtown Historic. With the borrower
defaulting on the loan early this year, RLJ Lodging acquired the
property through a bid that equaled the company's basis in the
Having around 16.5 million square feet of total office space
within close proximity, the hotel is expected to benefit greatly
from the corporate demand. Headquarters of notable companies like
The Coca-Cola Company
The Home Depot, Inc.
Delta Air Lines Inc.
) are located here. Also, the Federal Reserve Bank of Atlanta,
Georgia Institute of Technology, Equifax, Norfolk Southern and
PricewaterhouseCoopers are positioned nearby.
Regarded as one of the top convention destinations in the U.S. as
well as a premier entertainment district, the Atlanta market
opens up opportunities for the company to boost its top line.
Later this year, RLJ Lodging plans to close down the hotel and
make a comprehensive renovation. It will reopen in the third
quarter of 2014 and the company estimates investments (including
capital expenditures) to lead to a forward capitalization rate of
about 12% based on the 2015 net operating income of the hotel.
With the acquisition of the above-mentioned property, RLJ Lodging
now owns 150 properties, including 148 hotels and 2 planned hotel
conversions, located in 22 states and the District of Columbia.
We expect the acquired property's RevPAR to gain from the diverse
economy of Atlanta that also serves as a gateway to the
southeast. Also, its acquisition at a favorable price is
Currently, RLJ Lodging carries a Zacks Rank #2 (Buy).