The shell of what was to be the Landmark Hotel was sold at auction in a Charlottesville courtroom last week to a property developer from Atlanta who paid $6.25 million for local investor Halsey Minor’s failed project, and hopes to turn it into one of a string of boutique luxury hotels.
The auction, agreed to by creditors owed large sums on the long-stalled Downtown project, took less than five minutes. John Dewberry, owner of Dewberry Capital, appeared in person to place the winning bid, beating out only one other participant, J.B. McKibbon. Former Minor partner Lee Danielson, expected to make another attempt at owning the property, failed to provide evidence he had the financial backing to support the minimum $3 million bid and never made it to the table. Omni Hotel Group parent company TRT Holdings met the minimum, but declined to move forward with the auction once Dewberry upped the ante to $3.5 million.
A former quarterback for Georgia Tech who was born in Waynesboro and used his Canadian Football League signing bonus to fund his first real estate venture, Dewberry, now in his late 40s, said his firm has primarily built shopping centers and urban high-rises. He and his brother have amassed a fortune in Atlanta buildings, and have laid claim to much of the property along the city’s famous Peachtree Street. The company made a move to get into the boutique hotel market several years ago when Dewberry bought a hurricane-battered and long-neglected building in downtown Charleston. He’s moving ahead on that hotel, he said, and hopes to start work on the new Charlottesville project within a year.
But the company has seen one hotel purchase turn out poorly. Dewberry bought a downtown Atlanta property owned by Wyndham in 2003, hoping to renovate and rebrand it, but the deal ultimately failed.
“We were in the process of considering developing it into a three-star hotel when the economy went south,” said Brandon Hatfield, Dewberry’s senior vice president of finance. “There were issues with the project altogether, and we felt there was no need to chase good money after bad to try to reinvest dollars in the hotel,” he said. The company’s lender foreclosed on the property last year.
Hatfield said Dewberry’s new push is based on a totally different business model. Instead of acquiring big existing hotels or building smaller ones from scratch, the company is focusing on buying up blighted, abandoned projects in strong markets—like Minor’s Landmark—and picking up where the last owner left off.
“With the amount of money you have to put into it per key, boutique hotels don’t make a lot of sense for ground-up development,” Hatfield said.
Dewberry, who visits Charlottesville frequently and is kept appraised of development news by his golf buddy, local realtor Stephen Mclean, said the Downtown Mall property had piqued his interest years ago, but the legal quagmire surrounding the Landmark turned him off.
“I’m the kind of guy who’s happy to step outside and settle it in an alley,” he joked, “but I hate lawsuits.”
Dewberry said he plans to pour millions more into the project, and add several dozen more rooms to the original 100-room concept. Hatfield said Dewberry’s initial assessment of an additional 55 rooms seemed high, but confirmed the company would attempt to squeeze in more keys to the existing floor plan.
“There’s no difinitive number, but we’re going to review the existing building envelope and see if there’s an optimal number of rooms,” Hatfield said.