Hotel Bardo Savannah opened in February 2024 and is part of The Leading Hotels of the World. Photo credit: Tom Reid |
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functional. At the same time, ground-up development costs swelled making acquisitions and conversions an easier way to grow. Simultaneously, many hotel owners were on life support, having depleted FF & E reserves to pay down debt as revenue dried up.“ We knew there was a moat around new hospitality offerings and the older, tired assets lost their ability to renovate,” Kully said.“ How could we enter that space cost effectively and exclusively?”
Left Lane turned to science and data, identifying markets, mostly secondary pockets, to consider investment, cities like Austin or Tampa, 12 markets altogether. They did what no one was doing at the time:
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hopped on empty airplanes and got to work.
STALKING ASSETS The hunt was for well-located office buildings with floor plates suitable to be converted to the shallower nature of hotels; things like operable windows, which can be scant in office buildings.( Some 98 % of office buildings can’ t be cost effectively converted, Kully noted.) They also needed to have what Kully called iconic facades, which would entitle them to tax credits to defray the redevelopment costs. Last, and maybe most important,“ They needed to be bought cheaply,” he said.
To do this, Left Lane employed a proprietary CMBS
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model that considered loan maturities and loan health of select buildings and borrowers. Instead of buying assets outright, Left Lane employed a different method. As Kully explained it, owners of a building could run an open sales process and sell, but having owned the asset for decades, it would depreciate to a negative tax basis.“ They’ d have to come out of pocket and pay the IRS,” he said.
There was an alternative. Instead of selling the asset outright, the owners could partner with Left Lane and its fresh capital and create a rateleading asset that they could be a minority interest holder in.
An example of Left Lane’ s work and strategy is the
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upcoming 221-room Recess Hotel & Club in Savannah, Ga., being refashioned from the historic Manger building, which overlooks the city’ s Johnson Square.( Curiously, before becoming an office building some 40 years ago, it was a hotel.) The hotel, which will not only have guestrooms but a members-only club( a hallmark of Left Lane), co-working space, rooftop pool and restaurant, is slated to open in early 2026.
Recess is one of two brands developed and operated by Left Lane, the other named Bardo.( Kully calls Recess its lifestyle brand while Bardo is luxury lifestyle.) Up to now, Left Lane’ s crown achievement is the 149- room Hotel Bardo in Savannah, Ga., which is part of The
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July / August 2025 hotelsmag. com 59 |