German real estate company Newport RE will not be able to fulfill its dreams to revitalize about 10 blocks of South Downtown Atlanta after investor funding dried up, forcing the company to sell its entire portfolio.
Newport announced July 26 it would be selling its portfolio for its massive project, named South Dwntwn, to Atlanta-based Braden Fellman Group. The portfolio includes 53 buildings and six acres of parking lots, including Historic Hotel Row, South Broad Street properties, the M Rich Building and the HL Green Co building. The project’s centerpiece, 222 Mitchell, is also being sold as part of the deal.
Terms of the agreement were not disclosed. BFG is set to close on the South Downtown portfolio in the fourth quarter of this year, according to a Newport news release.
Newport began buying properties in South Downtown in 2016, amassing dozens of historic buildings for adaptive reuse. The company’s $500 million vision over 10 years was to create a thriving neighborhood with retail, restaurants, office, hotels and residential spaces.
But market changes brought on by the COVID-19 pandemic, Russia’s war on Ukraine and rising interest rates led investors in South Downtown to decide to back out.
“We believe in this neighborhood wholeheartedly; our vision was right but our timing was off, and we have the highest hopes that South Downtown will continue becoming a cool, historic, downtown neighborhood that Atlanta deserves,” said Newport CEO Olaf Kunkat in a news release.
“Simply put, the market changes coming out of COVID, prolonged war in Europe and recent rise in interest rates led Newport and our South Downtown investors needing to reprioritize capital investments,” Kunkat said.
“As a result, Newport will only be focused on investment and development opportunities in our primary market of Germany,” he said.
“As for South Downtown, this decision is incredibly hard and disappointing. We are convinced that the project needs to continue under a U.S. developer and are grateful to have found a uniquely qualified team with deep history in Atlanta to assume the entire portfolio with Braden Fellman,” Kunkat said.
Historic Hotel Row is the only phase of South Downtown that is complete, and retail openings and signings will continue throughout the year. TydeTate Kitchen opened in April, and Spiller Park Coffee plans to open its fourth location later this year.
Newport’s plans to adapt 222 Mitchell, a former bank headquarter that spans an entire block, into a major office and retail building will change under Braden Fellman Group’s ownership.
According to the news release, immediate plans include continuing to ensure successful openings for Hotel Row’s retail and restaurant tenants and resuming construction at 222 Mitchell “to deliver much needed residential units and a similar robust retail experience to the original plans.”
More announcements are expected to come soon on future plans and changes for the neighborhood.
“We’re extremely proud of the work we’ve done restoring Historic Hotel Row and setting the stage for South Downtown to be a sought-after destination in our city,” said April Stammel, Senior Vice President of Marketing, Leasing, & Community at Newport, in the release.
“As part of Newport’s local team that has worked on the ground for the past six years, this is incredibly bittersweet,” she said. “We’ve assembled an amazing portfolio of contiguous historic buildings and vacant land, and I am fully confident this next chapter with Braden Fellman will inject the stability needed to continue pushing the neighborhood forward.”
Braden Fellman Group was founded in 1981 with a “vision to breathe new life into Atlanta’s neglected older homes and create a distinctive renting experience unavailable from newer, cookie cutter properties,” according to its website.
Last year, Braden Fellman Group helped transform the former headquarters of the North Georgia Methodist Conference at 159 Ralph McGill Blvd. in Downtown into the Revival Lofts.