The St. Regis - Winner "Residential Deal of the Year"

March 2012

 

Best in Atlanta Real Estate - 2011 Awards "Tavistock purchases "classic" St. Regis"

From Atlanta Business Chronicle by Giannina Smith Bedford , Contributing Writer
Date: Friday, March 2, 2012, 6:00am EST


The acquisition of The St. Regis Atlanta came about after a traveling executive stayed the night at the luxury Buckhead hotel and was more than a little impressed. Although the hotel located on West Paces Perry Road wasn't on the market, the executive managed to get a meeting with the project's development team to inquire about purchasing the 151-room hotel and its unsold condos. The executive had ties to Tavistock Group, an international private investment company known for its partnerships with Tiger Woods on ultra-luxury resorts and a diverse portfolio that includes investments in 15 different countries. The Bahamian-based firm was launching a new hotel platform at the time and the St. Regis would become its first acquisition.
"We were told that one of the primary principals of Tavistock stayed at the St. Regis and thought it was a great place and would be a great asset to own," said Paul Freeman, St. Regis developer. "This led to an unsolicited offer. We did not have the property on the market, the hotel was doing great and we were very comfortable with our marketing plan to sell the remaining residences."
Announced in February 2011, the sale of the St. Regis was a shining light in the lackluster post-recession market. The hotel is said to have sold for between $300,000 to $350,000 a room, or up to $52 million, according to industry sources. The purchase of the St. Regis by Tavistock is the winner in the Residential category in Atlanta Business Chronicle's 2011 Best in Atlanta Real Estate Awards.
"The original developers did something extraordinary," said Douglas E. McMahon, managing director of Tavistock Group. "As we all know, the world got pretty tough and challenging in 2008. They were still doing OK, but I think we became the elegant solution for their ownership group because we were a single, interested buyer who could move quickly, quietly and decisively. Plus, they were confident we would stay true to the dream for the property."
Breaking ground in September 2006, the St. Regis project was headed up by president of Easlan Capital Kent Levenson, a partner and spokesman for the landowner of the St. Regis project. Levenson facilitated Freeman's introduction to the project to become the lead development partner after a deal with Florida developer WCI Communities Inc. fell apart.
Upon stepping in, Freeman became heavily involved in the design stage, modifying the hotel and redesigning the residences. Along with altering the wedding cake design that limited premium space at the top of the 26-story tower, Freeman added outdoor living rooms to all of the residences, as well as creating the hotel's Pool Piazza, the centerpiece of the St. Regis intown resort concept.
The premium residential space on the top of the hotel would eventually allow buyers the option of residences from 3,200 to 9,300 square feet.
"We thought it was a great location on the west side of Peachtree, a classically designed building, incredibly well constructed, great management with St. Regis flag and we were attracted to the owners who moved into the residences we thought they would prove to be critical to our going-forward selling success because they were true Atlantans with a vested interest in the building and marketplace," McMahon said. Some of these owners were garnered by Freeman's boutique marketing strategy that shied away from mass distributed promotional fliers. He used a grass-roots marketing concept where, at social gatherings, he got people excited by talking about the lifestyle of living on top of a St. Regis Hotel with use of all the hotel amenities and services. This marketing strategy resulted in more than 40 pre-sold residences prior to making a formal announcement. The financial crisis in 2008, however, caused many of the pre-sales for the condos to fall through and the St. Regis opened amidst economic recession. Like other high-profile Atlanta luxury hotel and condo projects of the last decade, the St. Regis faced a drop in real estate prices and impending debt maturity. However, the St. Regis obtained new financing from investment bank Morgan Stanley in July 2010 that helped restructure the original $176.5 million loan. Also, interest rates fell more sharply than Freeman and Levenson expected, and buyers put down a 20 percent cash deposit on condo pre-sales, enabling them to build up cash reserves. Those factors allowed the St. Regis team to carry the costs of the project.
"With diversity in our partnership, it was a very difficult decision to sell, but in the end, our partner, John Meshad, did a great job negotiating with Tavistock," Freeman said.